In the isoquant/isocost diagram (Figure 1), suppose the firm is producing 1,000 units of output at point A using 100 units of labor and 200 units of capital. As an outside consultant, what actions would you suggest to manage- ment to improve profits? What would you recommend if the firm were operating at point B, using 100 units of
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I understand why point A is not optimal but why is point B optimal when the isoquant curve is not tangent to the isocost line at point B?
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- Would you consider an interest payment on a loan to a film an explicit or implicit cost?Do you think that the taxicab industry in large cities would be subject to significant economies of scale? Why or why not?Managerial Economics: Foundations of Business Analysis and Strategy, 11h Edition 359 CHAPTER 9 Production and Cont in the Long Run 357 6. Jhe accompanying graph shows five points on a firm's expansion path when the price of labor is $25 per unit and the price of capital is $100 per unit. From this graph, hill in the blanks in the following table: 152 108 90 Q- 50 58 Q- 40 40 Q- 30 Q-20 Q- 10 820 64 200 288 300 Labor () LAC LMC LTC 10 20 30 40 50 Capital (K)
- QUESTION 4 Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Diminishing marginal returns become evident with the addition of the labor/s Output Labors (TP) 1. 90 126 4. 150 165 180 O A. Sixth B. Fourth CC. Third D. Second Click Save and Submit to save and submit. Click Save All Answers to save all ansuers. Save All AnsW DELL 40 3. 5.Consider a production process where flowers are grown (the output) using gardeners (labor) and greenhouses (capital). The quantity of flowers grown per day with various combinations of labor and capital are shown in the table. Fill in the marginal product of labor in the table below. (Enter your responses as integers.) Labor 0 1 2 3 4 5 Capital 1 1 1 1 1 1 O A. are experienced when the second worker is hired. OB. are experienced when the fifth worker is hired. O C. are experienced when the fourth worker is hired. O D. are experienced when the third worker is hired. O E. are never experienced. Output 0 160 480 640 720 760 Does the production of flowers experience the effects of the law of diminishing returns? The effects of the law of diminishing returns Marginal Product of Labor 160 320 160 80 4015. PLEASE ONLY C A firm can use three different production technologies, withcapital and labor requirements at each level of output as follows:TECHNOLOGY 1 TECHNOLOGY 2 TECHNOLOGY 3DailyOutputK L K L K L100 3 7 4 5 5 4150 3 10 4 7 5 5200 4 11 5 8 6 6250 5 13 6 10 7 8a. Suppose the firm is operating in a high-wage country, wherecapital cost is $100 per unit per day and labor cost is $80 perworker per day. For each level of output, which technologyis cheapest?b. Now suppose the firm is operating in a low-wage country,where capital cost is $100 per unit per day but labor cost isonly $40 per unit per day. For each level of output, whichtechnology is cheapest?c. Suppose the firm moves from a high-wage to a low-wagecountry but its level of output remains constant at 200 unitsper day. How will its total employment change?
- 15. PLEASE ONLY C. A firm can use three different production technologies, withcapital and labor requirements at each level of output as follows:TECHNOLOGY 1 TECHNOLOGY 2 TECHNOLOGY 3DailyOutputK L K L K L100 3 7 4 5 5 4150 3 10 4 7 5 5200 4 11 5 8 6 6250 5 13 6 10 7 8a. Suppose the firm is operating in a high-wage country, wherecapital cost is $100 per unit per day and labor cost is $80 perworker per day. For each level of output, which technologyis cheapest?b. Now suppose the firm is operating in a low-wage country,where capital cost is $100 per unit per day but labor cost isonly $40 per unit per day. For each level of output, whichtechnology is cheapest?c. Suppose the firm moves from a high-wage to a low-wagecountry but its level of output remains constant at 200 unitsExhibited in the table below are the two isoquants and the isocost for a hypothetical firm A B C D E F Labor 40 28 18 10 4 0 Capital 1 2 3 4 5 6 Labor 80 38 28 20 14 10 Capital 1 2 3 4 5 6 Labor (P2/unit) 25 20 15 10 5 0 Capital (P5/unit) 0 2 4 6 8 10 In a single graph, please perform the following: A. Draw the Isoquant curve B. Draw the isocost C. Identify the optimal point which is tangent to the isoquant line. Please mark the spot as X. D. How many units of capital and labor is the optimal combinationRecently, the Boeing Commercial Airline Group (BCAG) recorded orders for more than15,000 jetliners and delivered more than 13,000 airplanes. To maintain its outputvolume, this Boeing division combined efforts of capital and more than 90,000 workers.Suppose the European company Airbus enjoys a similar production technology andproduces a similar number of aircraft but that labor costs (including fringe benefits) arehigher in Europe than in the United States.o Please explain whether workers at Airbus have the same marginal product asworkers at Boeing?
- Nimbus, Inc., makes brooms and then sells them door-to-door. Here is the relationship between the number of workers and Nimbus' output during a given day. I have completed the first two rows. Workers Output Marginal Total Average Marginal Product Cost Total Cost Cost $200 --- --- --- 1 20 20 $300 $15 $5 2 50 30 $400 $8 $3.33 90 4 120 140 6 150 7 155 Fill in the column of marginal products. What pattern do you see? How might you explain it? Hint: incorporate Diminishing Marginal Product.15. A firm can use three different production technologies, withcapital and labor requirements at each level of output as follows:TECHNOLOGY 1 TECHNOLOGY 2 TECHNOLOGY 3DailyOutputK L K L K L100 3 7 4 5 5 4150 3 10 4 7 5 5200 4 11 5 8 6 6250 5 13 6 10 7 8a. Suppose the firm is operating in a high-wage country, wherecapital cost is $100 per unit per day and labor cost is $80 perworker per day. For each level of output, which technologyis cheapest?b. Now suppose the firm is operating in a low-wage country,where capital cost is $100 per unit per day but labor cost isonly $40 per unit per day. For each level of output, whichtechnology is cheapest?c. Suppose the firm moves from a high-wage to a low-wagecountry but its level of output remains constant at 200 unitsOutput (units per day) 19 17 15 54 14 7 2 1 1 1 I 1 F 1 I 1 1 I I 1 I 1 1 1 1 1 T II II LI I 1 1 1 1 1 F 2 1 1 I T 1 3 4 Labor Input (workers per day) 5 Total output The marginal product of the sixth unit of labor in the figure above is: A. 4.0 B. -4.0 C. 15.0 D. 2.5 E. NONE OF THE ABOVE