Find the optimal choices of labor and capital

Assignment Help Business Economics
Reference no: EM131005390

Suppose we now care about the long run decisions of a firm that has a production function of the form q = 2L + 3K

Now suppose instead that the price of each unit of labor is 3 and the price of each unit of capital is 4. Firm’s output is still 20. Find the optimal choices of labor and capital. Show all your steps. Draw the optimization problem and locate the optimal choice in the graph.

1. If the price of each unit of labor is 4, the price of each unit of capital is 5 and the firm decides to produce 20 units of output, find the optimal choices of labor and capital.

2. Can you find the price ratio (that is w/r) at which the optimal bundle changes? Justify your answer.

Reference no: EM131005390

Questions Cloud

Prepare appropriate entries for international machines : Prepare appropriate entries for International Machines to record the arrangement at its commencement, January 1, 2013, and on March 31,2013.
What is the income elasticity of demand for steak : Suppose that after hurricane Irene, the average income in Cape Charles, Virginia decreased by 14%. In response to this change in income, suppose the demand for steak in Cape Charles decreased by 4%. What is the income elasticity of demand for steak?
Design latest version of that where it can show exact level : Design a latest version of that where it can show exact level of the water in over head tank by using a seven segment display.
Determine the appropriate lease classification : Each of the four independent situations below describes a lease requiring annual lease payments of $10,000. For each situation, determine the appropriate lease classification by the lessee and indicate why.
Find the optimal choices of labor and capital : Suppose we now care about the long run decisions of a firm that has a production function of the form q = 2L + 3K. Now suppose instead that the price of each unit of labor is 3 and the price of each unit of capital is 4. Firm’s output is still 20. Fi..
About the long run decisions of a firm : Suppose we now care about the long run decisions of a firm that has a production function of the form q = 2L + 3K. Draw the isoquant that represents 20 units of output. If the price of each unit of labor is 1, the price of each unit of capital is 2 a..
Prepare the appropriate journal entry on december : Prepare the journal entry for American Food Services at the commencement of the lease on January 1, 2013.
Long run decisions of a firm that has production function : Suppose we now care about the long run decisions of a firm that has a production function of the form q = 4L^1/2 + K. What are the optimal choices of inputs for this firm? Do you find something unusual what compared to the optimal choices for q = 10 ..
Perfectly competitive firm-firms profit at this quantity : Suppose you manage a perfectly competitive firm. Your short-run total cost is given by the following: TC=200+2q2, where q is the quantity produced by your firm. Given this total cost, the firm's short-run marginal cost is given by: MC=4q. If the mark..

Reviews

Write a Review

Business Economics Questions & Answers

  Elucidate how events such as the world trade center

Elucidate how events such as the World Trade Center and Pentagon attacks described in the case study affect the aggregate demand curve.

  Find the reliability of this chip

Time to failure distribution of a computer memory chip follows Normal Distribution with mean 9000 hours and standard deviation 2000 hours. Find the reliability of this chip for a mission of 8000 hours?

  Using edge worth-box-draw a pareto-optimal allocation

Pete and Paul live in an exchange economy (so we can use the Edge worth-box). The economy has endowment of 10 cheese slices and 10 crackers. Is Pete consuming 3 crackers and 5 cheeses slices a Pareto-optimal allocation? If not, how could you rearrang..

  Assume an economy without government and without trade

Assume an economy without government and without trade. Suppose the Consumption function is given by C=100+0.8Y, whereas I=50. What is the equilibrium level of income in this case? What is the level of saving in equilibrium?

  Specializes in wedding-related activities

A professional photographer who specializes in wedding-related activities paid $16,000 for equipment that will have a $2000 salvage value after five years. He estimates that his costs associated with each event amount to $65 per day. If he charges $3..

  What is the payoff to an individual choosing to be criminal

Consider a neighborhood with 1000 residents. Each individual must choose (let’s assume simultaneously) whether to be a criminal or not. If an individual chooses to attempt a criminal act, their payoff is 200 if they succeed, but -300 if they are caug..

  About the fixed proportions production function

Suppose that a company has a fixed proportions production function that requires it to use two machines and one worker to produce 1000 units per hour. Explain why the cost per hour of producing 1000 units is 2v+w (where v is the hourly rent for the m..

  Qa purely spirited wheat farmer can sell any wheat he grows

q.a purely spirited wheat farmer can sell any wheat he grows for 20 per bushel. his 5 acres of land show diminishing

  Credit creation by the formal banking system

Two students, Ryan Wattenberg and Emma Bennett, are discussing the idea of convergence over coffee. Ryan considers convergence to be true in theory but impractical in the real world. Most developed countries do not have similar resources endowments. ..

  Assume the market for used cars is set up

Assume the market for used cars is set up as in the table below. There are two types of cars: lemons and peaches. Peaches are more reliable than lemons and thus have a higher value to both buyers and sellers. Sellers know the quality of their car, bu..

  Assuming income tax rate-straight-line depreciation charge

The Capitalpoor Company is considering purchasing business machine for $100,000. An alternative is to rent it for $35,000 at the beginning of each year. The rental would include all repairs and services. Assuming an income tax rate of 25%, a straight..

  Illustrate what is the average labor productivity

Illustrate what is the average labor productivity, in terms of square feet per painter-hour.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd