Theophilus is trying to hire professional scribes to copy letters. Theophilus can hire Greek scribes (G)...

 

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Theophilus is trying to hire professional scribes to copy letters. Theophilus can hire Greek scribes (G) at wage of 2 (WG = 2) and/or hire Roman scribes (R) at (W₁ = 5). The production of letters follows the equation q(G, R) = G+R, where q stands for the number of copied letters. 10 a) Draw an isoquant of output level 10 (q=10), with G on the horizontal axis. (2 pts.) b) What is the least costly way of copying 10 letters? What is the most costly way of copying 10 letters? Draw two isocost lines (as well as the isoquant of q=10) associated with the least expensive and the most expensive way to copy 10 letters. (4 pts.) c) What is the long run expansion path at the current scribe wages? Make sure to draw it, with explanation. (4 pts.) d) What are the long run cost function (C(q)), long run average cost function (AC(q)), and the marginal cost (MC(q))? Express them using equations, and draw these. (6 pts.) e) Suppose now that Theophilus has 10 Roman scribes who owes him a favour, and are willing to work for free. How does this change your answer in part b)? Make sure to find the minimum and the maximum cost of copying 10 letters, and draw the related isocosts. (6 pts.) Theophilus is trying to hire professional scribes to copy letters. Theophilus can hire Greek scribes (G) at wage of 2 (WG = 2) and/or hire Roman scribes (R) at (W₁ = 5). The production of letters follows the equation q(G, R) = G+R, where q stands for the number of copied letters. 10 a) Draw an isoquant of output level 10 (q=10), with G on the horizontal axis. (2 pts.) b) What is the least costly way of copying 10 letters? What is the most costly way of copying 10 letters? Draw two isocost lines (as well as the isoquant of q=10) associated with the least expensive and the most expensive way to copy 10 letters. (4 pts.) c) What is the long run expansion path at the current scribe wages? Make sure to draw it, with explanation. (4 pts.) d) What are the long run cost function (C(q)), long run average cost function (AC(q)), and the marginal cost (MC(q))? Express them using equations, and draw these. (6 pts.) e) Suppose now that Theophilus has 10 Roman scribes who owes him a favour, and are willing to work for free. How does this change your answer in part b)? Make sure to find the minimum and the maximum cost of copying 10 letters, and draw the related isocosts. (6 pts.)

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a The isoquant for q10 is shown below Isoquant for q10 b The least costly way of copying 10 letters ... View the full answer