3. The wage rate is £10 and the capital rate is £20. If a firm was spending £c, show what combinations of labour and capital are possible in an equation. Represent the combinations possible if the firm spent £200, £400, or £600 in a suitably labelled graph. 4. A firm has technology such that it can produce... q=L+K a. What name do we give to this production function? b. Assume output q = 30. Draw the isoquant in a suitably labelled graph. 5. Assuming the same wages and technology as before - how much does it cost the firm to produce q = 30? How much labour does it employ? How much capital?
3. The wage rate is £10 and the capital rate is £20. If a firm was spending £c, show what combinations of labour and capital are possible in an equation. Represent the combinations possible if the firm spent £200, £400, or £600 in a suitably labelled graph. 4. A firm has technology such that it can produce... q=L+K a. What name do we give to this production function? b. Assume output q = 30. Draw the isoquant in a suitably labelled graph. 5. Assuming the same wages and technology as before - how much does it cost the firm to produce q = 30? How much labour does it employ? How much capital?
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: The Cost Of Production
Section: Chapter Questions
Problem 3PA
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Transcribed Image Text:B: Theory: Cost Minimisation (isocost-lines and production)
Note: In the class, I will put capital on the 'Y' axis and labour on the 'X' axis. Obviously, the choice
doesn't matter mathematically, but if you want your graph to look like mine, do the same!
3. The wage rate is £10 and the capital rate is £20. If a firm was spending £c, show what
combinations of labour and capital are possible in an equation. Represent the combinations
possible if the firm spent £200, £400, or £600 in a suitably labelled graph.
4. A firm has technology such that can produce... q=L+K
a. What name do we give to this production function?
b. Assume output q = 30. Draw the isoquant in a suitably labelled graph.
5. Assuming the same wages and technology as before - how much does it cost the firm to
produce q = 30? How much labour does it employ? How much capital?
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