Question: A firm's technology for producing its output from labor (L) and capital (K) is The wage is $2 per unit of labor and the cost

A firm's technology for producing its output from labor (L) and capital (K) is

The wage is $2 per unit of labor and the cost of capital is $5 per unit of capital.
a. Does the firm's technology have a declining MRTSLK?
b. What is the firm's cost function if both inputs are variable?
c. Does the firm have economies of scale, diseconomies of scale, or neither?
d. Suppose that the firm is initially producing 30 units of output. What is its cost function in the short run (when capital is fixed)? Graph the long-run cost function and this short-run cost function in the same figure, labeling clearly all the important features such as where they each hit the vertical axis and any places they both touch.

- V4LK+ K?. F(L, K)=4LK+K.

Step by Step Solution

★★★★★

3.41 Rating (170 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a The firms technology has a declining MRTS LK b The firms cost function if both inputs are variable ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

847-B-E-D-S (2764).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

Firm S supplies inputs to firm B. Because producing the input is quite complicated, some defects are inevitable. Firm S can reduce the rate of defects at a cost. In turn, defective parts lower firm...

What are economies of scale and diseconomies of scale? How do they arise? What do they imply for the shape of the LRAC curve?

When a firm uses K units of capital and L units of labor, it can produce Q units of output with the production function Q = KL. Each unit of capital costs 20, and each unit of labor costs 25. The...

A firm's technology for producing its output from labor (L) and capital (K) is The wage is $4 per unit of labor and the cost of capital is $7 per unit of capital.a. What is the firm's MRTSLK? Does...

Kindly solve these for me 4. (5 points) Consider the utility function u(x, y) = 10 In(x) + y. (a) Let px = 10 denote the price of x, let py = 1 denote the price of y and let / = 100 denote the...

Problem 1 A rm produces a single output using labor (L) and capital (K ) according to the production function Q = L%K%. The output sells at price p = 9 per unit. A unit of labor costs 11; = 1 and a...

On the Excel file "exam2_Q10" , you will find a data file that contains data on output (Q), labor (L), and capital (K) of Bobcats electric company. Please save and submit the workbook to the CANVAS....

Assume a firm has the following production function with inputs labor (L) and capital (K): q=1/2L^1/2K Assume that, in the short-run, the firm's capital is fixed at two units,K=2. In addition, assume...

1. The question contains data on output (Q), labor (L), and capital (K) for Bobcat's Electric Company. Assuming a labor cost of $25,000 per year and a capital cost of $5,000 per unit, kindly provide...

Show the steps or formula to solve the questions. 1. A goatherd has the cost function c(y) = 4y2, where y is the number of tubs of goat cheese she makes per month. She faces a competitive market for...

A. If you are the head of Australian operation of a leading third-party logistics 3PL service provider such as Toll, Linfox, how would you apply "Big data analytics" to improve your logistics...

You just had a meeting with your new personal taxation client, Irene. She has provided you with lots of tax information and supporting backup to complete her tax return. Irene is interested in the...

6 Name and explain two strategies you could use to help spell unfamiliar words.

During a project review, a stakeholder requests an additional feature. What should the project manager do? a) Implement the feature immediately b) Evaluate the impact of the feature and process it...

1. The firm-specific demand curve shows the relationship between the ____ charged by the firm and the ____ by the firm. 2. The firm-specific demand curve is ____ (horizontal/negatively) sloped for a...

1. Economic profit equals ________minus________. 2. Economic cost equals ________cost plus ________cost. 3. For a perfectly competitive firm, marginal revenue equals ________, and to maximize profit,...

8:54 bill's footwear reatils running shoes for thirty dollars per pair. bill's footwear spends one thousand dollars a month in rent and pays teo full-time employees to each work one hundered and...

The management of Mecca Copy, a photocopying center located on University Avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year: The beginning balance...

You can use any MOS process you want. OVDD VGEMA Vo -0+ M1 M3 M2 Design specs: 1) Vo=Vi=Vpp/2 (DC) 2) vo/vi=1 (ac) Report should include 1) DC, ac and frequency analysis done by hand. Through any...