Answered: Define and discuss the Weak Axiom of…

Define and discuss the Weak Axiom of Cost Minimization (WACM). Also show that if the firm’s behavior is consistent with WACM, there exist convex and monotonic isoquants

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter8: Production And Costs

Section: Chapter Questions

Problem 9QP

See similar textbooks

Related questions

Q: 14. Explain which of the following is a fixed cost or a variable cost for Southwest Airlines. a. The…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: 1. In a the short product process a(an) _marginal product of labor explains why marginal cost is…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Consider a producer with the following input factors of production costs. Specify the producer's…

A: Var/unit Fixed/yr Labor $5.00 $100,000 Materials $10.00 Capital $40,000 Land $10,000

Q: the fixed input is the two hectare of land and the variable input is fertilizer explain how the…

A: The law of diminishing returns state that increasing a factor of production does not always lead to…

Q: 1.Explain why firm may suffer from diseconomies of scale. 2.Give 2 examples why a firm can benefit…

A: "Economies of scale are the cost advantages to firms when they increase their scale of production."…

Q: I need assistance with this assignment.

Q: Answer the attached question

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Consider the following table illustrating the production function of gadgets. Furthermore, suppose…

A: Total cost can be calculated by using the following formula.

Q: 1. Suppose a chair manufacturer is producing in the short run (with its existing plant and…

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: 1) Explain in details whether the underlined part of statement is true or false. In short-run…

A: Production refers to the process of using various material inputs and immaterial inputs in order to…

Q: Suppose a business manager of the factory wants to assess in terms of elasticity of demand, whether…

A: Elasticity is relevant strategical measurement to know the behaviour of consumer and producer about…

Q: above table shows the short-run total product schedule for the campus book store. When the fifth…

A: Marginal productivity of labour measures the change in total productivity with an additional unit of…

Q: 3. A firm uses labor and capital to produce an output. The hourly cost of labor is 10 and the hourly…

A: As per the guidelines, we are allowed to answer the first question only in case of multiple…

Q: 6. The Miller Company is trying to determine the combination of inputs to produce a specific volume…

A: Costs are the expenses that firms incur during the production processes. The firm’s costs depend…

Q: Suppose a chair manufacturer is producing in the short run (with its existing plant and equipment).…

A: a. The marginal and average product of labor can be calculated as follows: Thus, both marginal and…

Q: What is the diference between accounting proft and economic profit? OA Economic profit subtracts…

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: Consider a pizza restaurant where ovens are a fixed input and workers are variable inputs. Assume…

A: Marginal physical product = change in quantity of output Marginal cost = change in total cost /…

Q: 13) Consider a technology exhibiting diminishing MRTS. If capital is fixed, but a firm varies labor…

A: Answer: Diminishing MRTS: Marginal rate of technical substitution refers to the change in capital…

Q: 1. Suppose that a producer has the following production function: -13 Where Q is output, and L and K…

A: A production function shows the relationship between input and output. it shows how much input is…

Q: If the total quantity is 100, the average fixed cost is 10, then we can say that the total fixed…

A: Fixed costs are the costs that do not depend on the output, that is, these are independent of output…

Q: The point of tangency between a convex isoquant and an isocost line represents an optimal…

A: Isocost line represents all input combinations that yields the firm the same cost

Q: A firm's product sells for $4 per unit in a highly competitive market. The firm produces output…

A: Competitive market: It refers to the market under which there are many firms that are available and…

Q: Output fixed cost variable cost total cost marginalcost average variable cost 0 600 1 600…

A: In a market, a firm can compute different types of cost using one or two cost functions such as…

Q: What is the marginal physical product (MPP) of a variable input, like labor?How do you derive the…

A: The marginal physical product (MPP) is the change in output caused by a change in the amount of…

Q: App9: Consider the following table of long-run total costs for three different firms: Quantity 1 2 3…

A: Economies of scale refers to a situation when the average total cost decreases as output increases…

Q: 14. When isoquants get progressively closer together there is a. increasing returns to scale b.…

A: When isoquants get progressively closer together, there is increasing returns to scale (IRS). This…

Q: 2.4 Q7 In the theory of the firm, economist consider the total cost to be a function of the output…

A: According to the mathematical definition of the function, it is a relation which associates each…

Q: Refer to the table below which shows the total cost of producing various output levels in the long…

A: Diseconomies of scale refers to the increase in average cost of production when firm increases…

Q: Give an example of a fixed cost and a variable cost.

A: Variable and Fixed costs in economics are those two types of costs that a firm incurs during the…

Q: Question: How does the average hourly manufacturing salary in Australia affect cost efficiency? How…

A: Cost efficiency: The act of saving money by modifying a product or process to perform more…

Q: 3. A firm has a total fixed cost of $60 and total variable costs as indicated in the table. Complete…

A: Total fixed cost is the cost that does not change as the level of output changes. For example,…

Q: 1) Use the graph to answer the question. Between points C and D, the long-run average total cost…

A: As per the guidelines answer is given to the first question. (1) "Long run average total cost curve…

Q: 2. A firm is using 7 units of labor and 100 units of capital to produce 1000 units of goods. At…

A: Cost of labour is $15 per unit but quantity is less Cost of capital is $2 but quantity is more

Q: Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only…

A: Short run costs are those cost in which only one factor is variable and other factors are fixed.…

Q: Define and discuss the Weak Axiom of Cost Minimization (WACM). Also show that if the firm’s behavior…

A: As per the Weak Axiom of Cost Minimization (WACM) the estimates determines the non-parametric test1…

Q: Bozo is a clown. He wants to start a clowning business where he sends other clowns out to birthday…

A: When there are 2 workers,Output (Birthday parties)=7When there are 3 workers,Output (Birthday…

Q: 81. If a firm is operating efficiently, how can it reduce cost in the short run? O downsizing…

A: In a market, a firm can efficient operates is business if it is able to earn economic profit in the…

Q: 5. Consider a firm that uses both labor and capital in production. The price of capital is $20 per…

A: Cost is the total expenditure incurred in producing a good or service.

Q: 8. A firm's fixed costs for 0 units of output and its average total cost of produc ing different…

A: Hi student, thanks for posting the question. As per the guidelines, we can provide the answer for…

Q: 3 Production Function with Two Inputs Assume that a firm choose K and L inputs. At the start of a…

A: Cobb Douglas production function Q=LαKβTC=WL+rK

Q: 4. )At Alan's landscaping firm, labor is fixed in the short run. Increasing his use of capital…

A: The first stage is increasing returns, the second stage is diminishing returns and the third stage…

Q: [16] Operating in the short run with one fixed input and one variable input, the marginal product of…

A: (16) Answer: Given Information, Marginal Product (MP) = 10 - X Output price = 3 Variable Price (Let…

Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

Define and discuss the Weak Axiom of Cost Minimization (WACM). Also show that if the firm’s behavior is consistent with WACM, there exist convex and monotonic isoquants.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Define and discuss the Weak Axiom of Cost Minimization (WACM). Also show that if the firm’s behavior is consistent with WACM, there exist convex and monotonic isoquants.
A firm has the production function f(X, Y) = x²/2 y1/2, where X is the amount of factor x used and Y is the amount of factor y used. On a diagram we put X on the horizontal axis and Y on the vertical axis. We draw some isoquants. Now we draw a straight line on the graph and we notice that wherever this line meets an isoquant, the isoquant has a slope of -3. The straight line we drew Select one: O a. is vertical. b. is horizontal. c. is a ray through the origin with slope 3. d. is a ray through the origin with slope 4. O e. has a negative slope.
Based on the table you created in image, Choose one isoquant and compute two MRTS at least! (for an example from point A to B and from B to C)
Mark launders his white clothes using the production function q=4B + G, where B is the number of cups of Clorox bleach and G is the number of cups of a generic bleach, where Clorox bleach is four times as potent. Use the line drawing tool to graph an isoquant for output of q = 20. Label this line 'isoquant'. Carefully follow the instructions above, and only draw the required object. What is the marginal product of B? The marginal product of B is (Enter a numeric response using an integer.) What is the marginal rate of technical substitution at each point on an isoquant? The marginal rate of technical substitution is along the isoquant. C G, Cups of generic bleach 22- 20- 18- 16- 14- 12- 10- 6- 4- 2- 0+ 0 2 4 B, Cups of Clorox bleach 6 LV
Define and then derive the expression for the marginal rate of technical substitution.
Cheburashka uses kiwi fruits (K) and labour (L) to produce juice (q). His production function is: q=min{L/3, K0.5}, where labour is measured in hours, kiwi fruits in kg, and juice in (large) bottles. For example, if he uses 4 kg of kiwi fruits and 6 hours of labour, he can produce 2 bottles of juice. a) Draw isoquants for q = 1, q = 2 and q = 3 on a graph with labour on the horizontal axis and kiwi fruits on the vertical one. = $5 per kg. b) Let the price of labour-hour be given by w = $18 and the price of fruit by p What is the optimal amount of labour and fruit to produce q bottles of juice if Cheburashka strives to minimise costs? (Note that you need to provide expressions L(q) and K(q)). Illustrate on the graph from a) by drawing corresponding isocost lines. c) Draw the Cheburashka's expansion path on a graph from a). Derive an expression for the expansion path, i.e., K as a function of L. How does it depend on the wage and the price of kiwi?
What is meant by an expansion path? Illustrate expansion paths for a normal input and an inferior input.
Isoquant curves The Firm can trade two doctors for five gardeners and output remains constant What is the shape is the isoquant curve for the firm? (doctors on x axis) Find slope of curve at: (20,15) (5,25) (5,15)
please analyze the behavior of cost function and interpret the constant term in the expression of C(q)
Is this graph a valid set of cost curves? True/False
When do we say that a firm is operating with least cost combination of inputs?
Present a graph of the following. Label your graphs completely1. Using the isoquant map and isocost, show that combination M is the optimum combination of inputs and not combinations E and L.