Determine if the firm mix of inputs is optimal

Assignment Help Business Economics

Reference no: EM131161473

Consider a firm using labor and capital as its only inputs. The price of capital is $40 where the price of labor (wage) is $60. Using 500 units of labor and 500 units of capital the firm is producing 1200 units of output. At this mix of input the firm's MPL is 10 while its MPK is 5.

A. Write the firm's isocost equation. What is the slope of the isocost?

B. Determine if the firm's mix of inputs is optimal. Explain.

C. If your answer to "b" is no, what should the firm do to improve its performance? Explain.

D. Now suppose as a result of a mandated increase in the minimum wage the wage increases to $80. What would be the implication of this change for this firm?

Reference no: EM131161473

Questions Cloud

Why does your hr function exist : Why does your HR function exist? What do you want for your customers and how can HR provide that? Who are your customers and what can you do for them that will enrich their lives and contribute to their success, both present and future

Common argument in favor of minimum wage laws : A common argument in favor of minimum wage laws is that they are necessary to prevent employers from taking unfair advantage of their employees. What is the flaw of this argument?

Effects of tariffs not shown by partial equilibrium analysis : Describe the effects of tariffs not shown by partial equilibrium analysis. Explain how social, political, and economic institutions interact with one another. You may explain by using an example, if you wish

Marketing research report : Choose the target market for your product, and describe your target market in detail. Create a new product that would appeal to your market.

Determine if the firm mix of inputs is optimal : Consider a firm using labor and capital as its only inputs. The price of capital is $40 where the price of labor (wage) is $60. Using 500 units of labor and 500 units of capital the firm is producing 1200 units of output. Write the firm's isocost equ..

Writing an illustration essay is to convey an idea to reader : Writing an illustration essay is to convey an idea to the reader by providing illustrations (examples) that will solidify the existence of a topic. Process: For the illustration essay, you will complete the following steps.

Evaluation of speech in terms of organization and delivery : In a fully developed essay, summarize the speech that was selected for you. Include the following: Name of speaker, Topic/Proposition and Evaluation of speech in terms of organization and delivery.

Find the multipler for increase in fixed taxes consider : The government spends 13,00 billion on goods and services (a= 1300 )and levies on income tax equal to 20 y.the consumption function is c=300 +0.75di,where di is disposable income investment (i)is I =900and net exports are 100.Find the equilibrium gdp..

Amount of initial information : How much searching a consumer does will depend on the strength of the drive, the amount of initial information, the ease of obtaining more information, the value placed on additional information, and the satisfaction one gets from searching.

User Account

All Pages