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You are the manager for Herman Miller, a major manufacturer of office furniture. You recently hired an economist to work with the engineering and operation experts to estimate the production function for a particular line of office chairs. The relevant production function is Q = 6KL, where Q represents the annual chair production, K represents capital equipment, and L is the number of labor hours worked per year. The marginal products of capital and labor are given as follows: MPK = 6L MPL = 6K Workers at the firm are paid a competitive wage of $7.50 per hour. The firm estimates a $30 per hour rental rate on capital. The operating budget for capital and labor is $300,000 per year.
1. What is the firm's optimal ratio of labor to capital? Given the firm's $300,000 budget, how much capital and labor should the firm employ? How much output will the firm produce?
2. The state is planning to increase the minimum wage from $7.50 an hour to $15 an hour.
3. Assuming that the firm intends to maintain its pre-increase in minimum wage output, how much capital and labor should the firm employ? What happens to the firm's cost as a result of the the increase in minimum wage?
How much of Nm and Nw can you advise to use, how much M and W will be produced from the levels of nitrogen in (a) and determine the value marginal products of the two enterprises.
In 2011, the CPI increased by 1.4%, the GDP price index increased by 1.2% and the PCE increased by 1.8%, we can see all are increases, but why does each one of these measure give a different inflation rate?
How much do you have to deposit today in order to allow 5 annual withdrawals, beginning at the end of year 8, with the first withdrawal of $1000 with subsequent withdrawals decrease at the rate of 5% over previous year’s withdrawal? The interest rate..
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Would the sales of pollution rights or certificates be an efficient means of allocating a given amount of pollution.
ADVANCED ANALYSIS Assume that demand for a commodity is represented by the equation P = 90 - 2Qd and Supply is represented by the equation P = -5 + 3Qs where Qd and Qs are quantity demanded and quantity supplied, respectively, and P is price.
How vegetarians sometimes have trouble making sure they get enough protein in their diets.
Total surplus in a market does not change when the government imposes a tax on that market because the loss of consumer surplus and producer surplus is equal to the gain of government revenue. The Laffer curve is the curve showing how tax revenue var..
Four students from your economics class are sitting in a local restaurant Talk about the marketplace for coffee.
During a year of operation, a firm collects $175,000 in revenue and spends $80,000 on raw materials, labor expense, utilities, and rent. The owners of the firm have provided $500,000 of their own money to the firm instead of investing the money and e..
It comes to global expansion and setting up affiliates aboard, how is a service company's focus different from that of a manufacturing company
Illustrate what is the supply of dollars in the market for foreign-currency exchange. Write down your answer since you will need it to answer the next question.
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