Explain the meaning of mrts for production function

Assignment Help Microeconomics

Reference no: EM13125312

Suppose that a firm uses both labour (L) and capital (K) as inputs and has the long run production function q = LK - L, with MP_L = K - 1 and MP_K = L. Capital rents for $150 and labour can be hired for $75 per day.
i) Suppose that we are in the short-run and capital is fixed at K = 4. What is the production function?

If the firm wishes to produce q = 30, what combination of inputs should it use to produce as efficiently as possible?

ii) Calculate the MRTS when L = 3 and K=30? Briefly explain the meaning of MRTS for this production function.

iii) What is elasticity of substitution when the capital-labour ratio changes from 1/10 to 1/30?

Reference no: EM13125312

Questions Cloud

Find probability distribution for number of defective chips : Whose characteristics can be assume to be independent of each other, were examined. Let X denotes the number of defective computer chips.

Systems of equations application word problem : Stephanie bought eighteen pens, some black and the rest blue, for $8.22. The blue pens cost $0.06 more than the black pens. The number of blue pens that she bought was as close as possible to the number of black pens that she bought. What was the ..

Amount of caseys deduction : Casey owned stock in Jupiter Corporation that he donated to a university (a qualified charitable organization) on December 30, 2009. What is the amount of Casey's deduction assuming that he had purchased the stock for $10,000 on January 3, 2009, a..

Identify the limiting reagent for the combination : Identify the limiting reagent for the given combination of reactants. Calculate how many grams of whatever substance will be in excess and how many grams of HF will be made.

Explain the meaning of mrts for production function : Briefly explain the meaning of MRTS for this production function and what is elasticity of substitution when the capital-labour ratio changes from 1/10 to 1/30?

Compute the company predetermined overhead rate : Willow Creek Corporation bases its predetermined overhead rate on the estimated labor hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the labor hours for the upcoming year at 38,500 labor ho..

Illustrate what is total amount of other financing source : Illustrate what is the total amount of other financing sources to be recognized on the fund-based financial statements over this six-year period?

Weakly bounded subset-weak convergence : Suppose that E is a normed linear space, and C is a subset. Prove that C is weakly bounded if and only if C is norm bounded. Conclude that weakly convergent sequences in E are bounded.

Journal entries at the date of purhase : Soldan Corporation purchased a computer on December 31,2011, paying 30,000 down and a further payment due on December 31,2014.An interest rate of 10% is implicit in the purchase price. Soldan uses the Effective method and has December the 31 as y..

User Account

All Pages