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The degree of convexity of an isoquant determines the degree of substitutability of factors of production. Do you agree? Explain.
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- There are two factors of production, X and Y. They are being used to produce a fixed amount of output called A. If the amount of output, A is held constant, and the isoquants are convex, would the price of X going down always mean less of Y is used? Explain why or why not by explaining through the use of a graph.In our paper airplane company, some inputs were fixed and some were variable. Match the input to whether it was VARIABLE or FIXED. Paper- Stapler- Staples- Employees- Production space-The marginal rate of technical substitution is defined by: a. MRTS 2= MP/ P2 b- MRTS, 2 = MP,MP, C. MRTS2 = MP/P. d. MRTS 2= P/ P2 e. MRTS 2 = MP, /MP,
- The marginal rate of technical substitution is defined by: a. MRTS 2 = MP/ P2 b. MRTS 2= MP,MP2 C. MRTS 2 = MP/ P. d. MRTS 2= P/ P2 e. MRTS, 2= MP, IMP2Brian uses wool (K) and labour (L) to produce t-shirts (q). The production function is: q = min{1/3L, 2K}. The inputs are perfect complement.If he uses 0.5 kg of wool and 3 hours of labour, he can produce 1 t-shirt. Draw an expansion path on a diagram and derive an expression for the expansion path. How does it depend on the wage and the price of wool?Problem 3: Your firm produces fan merchandise for a football team. You want to assess if the four items manufactured-jerseys', 'caps', 'scarves' and 'shorts' are being produced optimally. In order to do this you increase each of the inputs (capital and labor) by one unit at a time and record the change in output from the current level for jerseys' and 'caps' while you decrease the inputs by one unit at a time and record the change in output from the current level for 'scarves' and 'shorts'. Currently, w = $25 and r = $40. The following tables record the different input and output levels. Use the values in the tables to arrive at your conclusions about the four production processes. Table 1: Output and Input levels: Production of Jerseys Output Level (q;)| Labor Units (L₁) | Capital Units (K;) 45 102 46 102 45 103 3241 3250 3258 Table 2: Output and Input levels: Production of Caps Output Level (qc) Labor Units (Le) Capital Units (Kc) 2354 2362 2360 1059 1054 1051 38 39 38 Table 3:…
- Consider the fictitious firm, Icelandic Investment Managers (IIM). The company hire investment managers as workers and laptop computers with artificial intelligence (AI) as capital to offer investment advice to clients. Both managers and the AI can provide advice, but they are not perfect substitutes. Draw representative isoquants for the two inputs. What assumptions are you making when you draw the isoquants? If the AI gets smarter, and as a consequence the inputs are more substitutable, what should happen to the shape of the isoquants? Both inputs are costs; managers have to be paid a wage, called “w” and the AI needs electricity, the price of which is “Pe”. This will generate an isocost line for a particular cost level C*. Please draw this, explaining carefully and fully the purpose of the axes. Now we can put these together. For a given output level of advice, A*, show what the optimal level of inputs are for IIM in a diagram. What is the economic interpretation of the intersection…Discuss general framework of Alfred Marshall's analysis by taking the concept of "substitution" into attention.An economy has the following Cobb-Douglas production function: ?=100?^(1/3)?^(2/3) . The economy has 125 units of capital and 64 units of labor. d. Calculate the marginal product of capital MPK. e. Calculate the marginal product of labor (MPL).