Assume the firms current capital stock is fixed

Assignment Help Microeconomics

Reference no: EM13698158

A steel producer has the production function q=10K^0.75 E^0.25 where q is the quantity of steel, in metric tons, K is the firm's capital stock, and E is the number of labor hours it employs (measured in thousands).

a) Assume the firm's current capital stock is fixed at K = 4096. If the firm employs E = 81 labor units, then how much steel does it produce?

b) Suppose the firm receives an order to produce 10,000 metric tons of steel. If its capital stock is fixed at K = 4096, then how many hours of labor must it employ to satisfy the order?

c) In the long run, the firm is free to vary both its capital stock and the number of workers it employs. Given this, what would happen to the firm's output if it doubles the amount of labor and capital it uses? What happens if it quadruples the amount? What does this result suggest in general?

Reference no: EM13698158

Questions Cloud

What is the value of the marginal product of labor : Assume all markets are competitive, the product price is p = $2 per unit, the wage rate is w = $16 per hour and the firm's production function is q=E(36?E), where E is the level of employment and the firm's fixed costs are zero.

Find the monopolists maximum profit : A newspaper has a monopoly on the local news market in a town. The market demand is given by P=1.70-Q/20,000, making the marginal revenue MR=1.70-Q/10,000. The marginal cost is constant at equal to 0.80. The fixed cost is 2,000. So, the total cost is..

Fiscal and monetary easing in japan and germany : At the moment, the market is completely ignoring things like record US trade deficits and the widening current account deficit. It is also largely ignoring the possibility of Federal Reserve rate cuts. Traders and investors are instead focusing only ..

What does the long run model say wage in this economy : Given a production Yt=(Abar)Kt^(1/3)Lt^(2/3) and K*=1000 and Abar=3/2. and also there are Labor=1000 workers who supply labor in elastically. What does the long run model say wage in this economy is?

Assume the firms current capital stock is fixed : A steel producer has the production function q=10K^0.75 E^0.25 where q is the quantity of steel, in metric tons, K is the firm's capital stock, and E is the number of labor hours it employs (measured in thousands).

Transportation is considering installing temperature logger : Atlas Transportation is considering installing temperature logger in all its refrigerated trucks for monitoring temperatures during transit. If the systems will reduce insurance claims by $40,000 per year for 5 years how much should the company be wi..

Semi annually through a company-sponsored saving plan : Ryan expects to deposit $1,000 now, $3,000 four years from now, and $1,500 six years from now in an account that is earning 12% per year compounded semi annually through a company-sponsored saving plan. What amount can he withdraw ten years from now?

What is future worth of a series of equal monthly payments : What is the future worth of a series of equal monthly payments of $5,000 if the series extends over a period of six years at 9% interest compounded?

What was the constant dollar percent increase in gdp : In 1988 the US gross domestic product (GDP) increased to $4.90 trillion at year end, from the 1987 year end level of 4.54 trillion in actual escalated dollar values. In the same year, the consumer price index rose approximately 4%. What was the const..

User Account

All Pages