Two inputs in the production function-labor and capital

Assignment Help Business Economics

Reference no: EM131244683

Suppose there are two inputs in the production function, labor and capital, and these two inputs are perfect substitutes. The existing technology permits one machine to do the work of three workers. That is, you can produce one unit of output using either one machine or three workers. The firm wants to produce 100 units of output. Suppose the price of capital is $750 per machine per week. What combination of inputs will the firm use if the weekly salary of each worker is $300? What combination of inputs will the firm use if the weekly salary of each worker is $225? What is the elasticity of labor demand as the wage falls from $300 to $225?

Reference no: EM131244683

Questions Cloud

Find the firms optimal capital and labor demand : Consider a representative firm that produces using capital (K) and labor (N), but that owns no capital. The firm can hire workers in the labor market at a wage w and can rent capital market at a rental rate r. Find the firm’s optimal profits. Find th..

How many units should be produced by production process : A Production Process A has a fixed cost of $340,000 and a variable cost of $145 per unit. Production Process B for the same product has the fixed cost of $1,250,000 and variable cost of $95.50 per unit. How many units should be produced by Production..

Making a rational human capital investment decision : Why might the decision to undertake an educational program be treated as an investment? What are costs and benefits from a private perspective? What are costs and benefits from a social perspective? Explain why it is necessary to determine the presen..

Hitlers invasion afterwards as subgame perfect equlibrium : The Diagram captures the situation in 1938. Chamberlain assesses the propability of hitler being amicable as p and that of him being beligerant as 1-p. Derive the condition on p that would support the signing of the Munich agreement and hitlers invas..

Two inputs in the production function-labor and capital : Suppose there are two inputs in the production function, labor and capital, and these two inputs are perfect substitutes. The existing technology permits one machine to do the work of three workers. That is, you can produce one unit of output using e..

How unemployment rates and levels of disposable income : How interest rates, inflation rates and gross domestic product in France influence blades & razors market for men in France ? How unemployment rates and levels of disposable income in France make an impact on blades & razors market for men in France ..

Indifference curve mapping-derive compensated demand curve : Using an indifference curve mapping, derive a compensated demand curve. When considering the welfare implications of a price change, why should an economist technically measure consumer surplus as the area under the compensating demand curve, rather ..

Suppose that at the equilibrium price and quantity : Suppose that at the equilibrium price and quantity, the marginal revenue is -$36 and the price elasticity of demand for a linear demand function is -0.67 Then we know that the equilibrium price is:

Draw persons budget constraint with the income guarantee : Consider an income guarantee program with an income guarantee of $5,000 and a benefit reduction rate of 40%. A person can work up to 2,000 hours per year at $10 per hour. Draw the person’s budget constraint with the income guarantee. Be sure to place..

User Account

All Pages