You are watching: Why are the slopes of isocost lines constant?
Which of the adhering to is a Cobb-Douglas production function? Q = 2K/3L Q = f(K, L)Q = K^0.50L^0.75 Q = 5K + 2.5L
Suppose a firm"s short-run manufacturing function is offered by Q = 16L0.8. What is the marginal product of the fourth worker? 1.85 4910 36
Which case will likely give rise to diminishing marginal product of labor? Hell"s Kitchen, which has enough counter area for 3 cooks per transition, decides to hire a fourth prepare per shift. A landscaping firm reareas all of its self-driven lawnmowers with push mowers. Plasma tv manufacturers are going out of business bereason of boosted competition from LCD televisions. Nevaeh"s Kitchen undertakes a huge expansion, doubling both the size of its kitchen and number of cooks.
Hell"s Kitchen, which has actually enough respond to area for three cooks per shift, decides to hire a fourth cook per transition.
In the brief run, the marginal product of labor: proceeds to rise so lengthy as the firm adds labor slowly.will certainly ultimately loss. is always diminishing. always rises bereason laborers end up being even more reliable with suffer.
In the long run, because firms can readjust both funding and also labor: firms fire workers, replacing the labor productivity with resources. firms will certainly thrive. production is even more expensive because firms must invest in both labor and resources. the influence of diminishing marginal retransforms is lessened.
Which of the adhering to statements is (are) TRUE?I. If labor and also capital are perfect substitutes in manufacturing, the isoquant is a downward-sloping line. II. If a firm needs to use inputs in addressed proportion such that the capital to labor ratio is always 2, the firm"s isoquants are L-shaped.III. If the production attribute is given by Q = min(14, 7), the firm can produce, at minimum, 21 systems of output.
Why are the slopes of isocost lines constant? because firms should usage much less labor if employing more resources bereason the marginal rate of technical substitution of labor for funding is continuous because firms have to usage capital and also labor inputs in solved proportions bereason firms can hire as a lot of an input as they desire without changing wperiods or rental rates
Suppose the wage rate is $25 per hour and also the rent on funding is $50 per hour. The equation for the isocost line is offered by: C = 75LK.C = 25L + 50K. C = 75(L + K). C = 2K/L.
Which of the adhering to statements finest exemplifies the firm"s constrained minimization problem? The firm desires to produce as a lot output as feasible by selecting values of L and also K that minimize RK + WL.The firm desires to produce as a lot output as feasible subject to the constraint that C = RK + WL. The firm desires to produce a given amount of output by selecting values of L and also K that minimize RK + WL. The firm desires to develop a offered quantity of output by selecting values of W and also R that minimize RK + WL.
The firm desires to develop a provided amount of output by picking values of L and K that minimize RK + WL.
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Suppose a firm is creating 2,475 devices of output by hiring 50 workers (W = $20 per hour) and also 25 units of funding (R = $10 per hour). The marginal product of labor and also marginal product of capital are 40 and 25, respectively. Is the firm minimizing the expense of producing 2,475 units of output? Yes, the proportion of the variety of employees to the wage amounts to the proportion of the number of systems of funding to the rental price. No, the firm should use more labor and much less resources. No, the firm need to use more of both labor and also capital. No, the firm have to usage more resources and also less labor.