In the Cost Minimization Problem, the isoquant curve for an output level equal to the output quota? Illustrates the cost of labor and capital a firm pays to produce a level of output in excess of an output quota. Illustrates all combinations of labor and capital that a firm cannot afford. Illustrates all combinations of labor and capital that a firm can afford. O Illustrates all combinations of labor and capital that a firm can use to produce a level of output equal to the outpu
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- Isoquant curves and isocost curves are tools that can explain how a firm might best respond to changes in the production environment. Present an example of an isocost curve where labor and capital are the two inputs, and explain what it is using language someone not trained in economics could understand. Present an example of an isoquant in the same diagram you used for your isocost curve, and draw the isoquant so it cuts the isocost curve twice. Explain what an isoquant is using language someone not trained in economics could understand. Label the two points A and B, where the isocost and isoquant curves intersect. Present a logical argument that explains why the firm should operate neither at point A nor point B, and present a point that would be optimal by drawing a new isoquant curve in the diagram. Add a second isocost curve to your diagram such that the firm is spending more money on inputs. Add a third isoquant to your diagram to show a firm that would become more capital…Consider a firm that produces output using industrial robots and skilled labor. Suppose it is the case that a reduction in the price of industrial robots causes the firm's labor demand curve for skilled workers to increase (i.e., to shift to the right). This implies that: There is diminishing marginal product of robots. O There is diminishing marginal product of skilled labor. O Robots and skilled labor are complements. O Robots and skilled labor are substitutes. The unit cost of skilled labor is below the unit cost of robots.A manager hires labor and rents capital equipment in a very competitive market. Currently the wage rate is $7 per hour and capital is rented at $11 per hour. If the marginal product of labor is 65 units of output per hour and the marginal product of capital is 55 units of output per hour, should the firm increase, decrease, or leave unchanged the amount of capital used in its production process? O The firm should leave capital unchanged. O The firm should increase capital. O The firm should decrease capital.
- Suppose that the marginal cost of producing a pound of cereal is $2, irrespective of the level of output, but there are also some fixed costs of production. Which of the following statements is correct? O The total cost curve is an upward-sloping straight line through the origin O The average cost curve is U-shaped The marginal cost curve is a horizontal straight line O The marginal cost curve intersects the average cost curve at its minimum pointThe Rocky Mountain Spring Water Company experiences a surge in orders, because the water of one of its major competitors is taken off the market due to news that samples contained benzene. As the Company struggles to increase production of its bottled water, it finds that the marginal product of labor, its only variable input, approaches zero. When the marginal product of labor becomes zero this month, the firm Select one: O a. will still be able to fill additional orders this month without hiring more workers. O b. won't be able to fill any additional orders this month. O c. will achieve maximum output per unit of labor. O d. will be able to fill additional orders this month by hiring more workers.Henry owns a Boba tea shop and produces delicious drinks under the production function q = 5KL where q is the number of servings generated per hour, K is the number of tea pots (capital), and L is the number of employees hired per hour (labor). The average product of labor and the marginal product of labor are both equal to APL = MPL 5K. Does labor exhibit diminishing marginal returns in this case? O No, the marginal product of labor is constant (for a given K). O No, the marginal product of labor is increasing (for a given K). O Yes, if capital also exhibits diminishing marginal returns. O Yes, this is true for all values of K.
- Suppose college graduates earn $25 an hour and high school graduates earn $5 an hour. Suppose too that the marginal product of college graduates at Johnson Tools is 8 hammers per hour, while the marginal product of high school graduates is 4 hammers per hour (regardless of the number of each type of worker employed). a. What is the least-cost production method for producing 100 hammers in an eight-hour day? O Hire one-third college graduates and two-thirds high school graduates. O Hire two-thirds college graduates and one-third high school graduates. Hire only high school graduates. Hire half college graduates and half high school graduates. O Hire only college graduates. b. What if the marginal product of high school graduates was instead 2? O Hire half college graduates and half high school graduates. Hire only high school graduates. O Hire two-thirds college graduates and one-third high school graduates. O Hire only college graduates. O Hire one-third college graduates and…The short-run production function for a manufac- turer of wireless earbuds is shown in the table below. Based on this information, answer the fol- lowing questions. Input of Labor (workers per week) Total Output of Wireless Earbuds 1 25 2 60 3 85 4 105 115 6 120 a. Calculate the average product at each quantity of labor. b. Calculate the marginal product of labor at each quantity of labor. c. At what point does marginal product begin to diminish?Explain how a firm’s production function is related toits marginal product of labor, how a firm’s marginalproduct of labor is related to the value of its marginalproduct, and how a firm’s value of marginal productis related to its demand for labor
- The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000. AP, MP 100 80 Average and marginal product of labor- 60 10 20 20 MP AP L 0 20 40 60 80 100 120 140 160 Labor When the firm uses 40 units of labor, what is marginal cost at this level of output? $70 ○ $35 ○ $60 $280Con Co. produces a collectible card game. Currently, the price of capital is at $50 and the price of labor is at $10. The marginal product of capital is 200 and the marginal product of labor is 30. To minimize cost of the given output, Con Co. should Use more capital Use more capital and labor Leave capital and labor as is Use more laborA small specialty cookie company, whose only variable input is labor, finds that the average worker can produce 100 cookies per day, the cost of the average worker is $32 per day, and the price of a cookie is $1.00. Is the firm maximizing profit? The firm O A. is not maximizing profit because the marginal revenue product of labor is greater than the wage. O B. is not maximizing profit because the marginal revenue product of labor is less than the wage. O C. is maxinmizing profit because the marginal product of labor is greater than the wage. O D. is not maximizing profit because the price of the output is not equal to the wage. O E. is not maximizing profit because the marginal product of labor is greater than the wage.