EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Chapter 6.5, Problem 2MQ
To determine
To describe: The substitutability of the given production function.
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answer question d
Q5. Jason is running a cleaning business, there are available labours (L) and machines (M) for Jason to use as inputs to produce cleaning service for his clients.
a) Suppose Jason must use both labours and machines without any specific ratio to complete the service for his clients, please write down the general production function formula for Jason. hint: you could use any letter if you want]
b) Under the function form of a), assume Jason's Marginal Rate of Technical Substitution (MRTSL, M) equals to 2, how do you interpret it?
c) Assume Jason now can use only single input, either labour or machine to complete the service, please write down the general production function formula for Jason. hint: you could use any letter if you want]
d) Under the function form of c), assume Jason's Marginal Rate of Technical Substitution (MRTSL, M) is always larger than the market price ratio between labour and machine (w/r), what should Jason do? why?
For a firm to maximize profit, it must minimize the cost of producing whatever quantity it produces. Use the isocost and isoquant tools to present a firm that is choosing the optimal levels of labor and capital (i.e., tools) to produce a certain quantity and a certain cost. Then, show in your diagram how this firm would respond if it were to expand and spend more on its inputs, assuming it is best for the firm to become more “capital intensive” as it grows. Comment on WHY a firm might best become more capital intensive as it expands, even when the relative prices of labor and capital remain unchanged.
The Nespresso stand needs two inputs, (hours of) labor and coffee beans, to produce its only output, cup of espresso. Producing an espresso always requires the same amount of coffee beans and the same amount of time. Which of the following production functions would appropriately describe the production process at Nespresso, where B represents ounces of coffee beans, and L represents hours of labor?
Select one:
a.
Q=B^0.6 L^0.6
b.
Q=min{2B,40L}
c.
Q=B/2+L/2
d.
Q=B^0.6 L^0.4
Chapter 6 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 6.2 - Prob. 1TTACh. 6.2 - Prob. 2TTACh. 6.2 - Prob. 1MQCh. 6.2 - Prob. 2MQCh. 6.3 - Prob. 1TTACh. 6.3 - Prob. 2TTACh. 6.3 - Prob. 1MQCh. 6.3 - Prob. 2MQCh. 6.4 - Prob. 1TTACh. 6.4 - Prob. 2TTA
Ch. 6.5 - Prob. 1MQCh. 6.5 - Prob. 2MQCh. 6.5 - Prob. 3MQCh. 6.6 - Prob. 1TTACh. 6.6 - Prob. 2TTACh. 6.7 - Prob. 1MQCh. 6.7 - Prob. 2MQCh. 6.7 - Prob. 3MQCh. 6.7 - Prob. 4MQCh. 6 - Prob. 1RQCh. 6 - Prob. 2RQCh. 6 - Prob. 3RQCh. 6 - Prob. 4RQCh. 6 - Prob. 5RQCh. 6 - Prob. 6RQCh. 6 - Prob. 7RQCh. 6 - Prob. 8RQCh. 6 - Prob. 9RQCh. 6 - Prob. 10RQCh. 6 - Prob. 6.1PCh. 6 - Prob. 6.2PCh. 6 - Prob. 6.3PCh. 6 - Prob. 6.4PCh. 6 - Prob. 6.5PCh. 6 - Prob. 6.6PCh. 6 - Prob. 6.7PCh. 6 - Prob. 6.8PCh. 6 - Prob. 6.9PCh. 6 - Prob. 6.10P
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