Consider the following example, which follows the analytical framework of Goldin and Katz (2008). a) Suppose the economy uses just two inputs, capital (K) and labor (L). If the cost of each unit of capital (what we called the rental rate, r) is $10 and the cost of each unit of labor (the wage rate, w) is $20, and the economy spends $100 total in costs of production, draw the isocost curve for the economy with capital on the y-axis. b) Based upon (a) above, depict an isoquant where, at the optimal production mix, the economy uses twice as much labor as it does capital.
Q: 4. College education benefits society by producing a more employable workforce, reducing crime and…
A: Providing a subsidy for education is a common way for governments to address positive externalities…
Q: 1. Consider a perfectly competitive market with a price of $21, where each firm has a cost function…
A: In the short run, firms in perfectly competitive markets can earn a profit. However, this attracts…
Q: Identify a financial market and describe it using an economic approach. What are the goods…
A: A issue or phenomena is analyzed using an economic approach by using economic theory. Understanding…
Q: WHAT IS THE DIFFERENCE BETWEEN NOMINAL INTEREST AND REAL INTEREST
A: An interest rate is the amount of money that a lender charges a borrower for the use of borrowed…
Q: Define the concept of elasticity of demand. Discuss how elasticity of demand can impact the size of…
A: Price elasticity of demand: It measures the percentage change in the quantity demanded for a 1%…
Q: Deborah sells bottled water from a small stand by the beach. On the last day of summer vacation,…
A: Team output is defined as the collective efforts of a team in which each member does their very best…
Q: 5. The price of trade Suppose that Croatia and Liechtenstein both produce ale and liquor. Croatia's…
A: Comparative advantage is the ability to produce goods and services at a lower opportunity cost than…
Q: Calculate the effective annual interest rate for 15% corresponding to each of the following: (d)…
A: Compounding is the act of accruing interest on both the initial principal and interest accumulated…
Q: The table shows the market for student workersat on-campus venues. If the college introduces a…
A: Unemployment in economics refers to the condition where individuals who are willing and able to work…
Q: What is breakeven point for each parameter if initial investment is £30K, yearly revenue £20K,…
A: The total cost includes both fixed costs such as the initial investment and variable costs such as…
Q: If TC=42+ 20Q+4Q2, what is the marginal cost at when Q=10? Enter as a value.
A: The marginal cost in economics is the variation in total production costs that results from creating…
Q: PRICE (Dollars per unit) 140 50 20 0 III 911 15 21 Region Between Y and Z Between X and Y QUANTITY…
A: The elasticity of demand quantifies how a change in a commodity's price impacts the amount that is…
Q: provide an assessment of the major requirements of the municipal budget and reporting regulation
A: Local administrations are an important layer in India's three-tiered governmental structure. In…
Q: Suppose supply is ?= 4 + (1/4)?? and demand is ?= 58 ―(1/2)??. Suppose a tax of $3 per unit is…
A: tax reduces the supply as its increases the price of goods or cost of production. As a result of…
Q: If the quantity demanded of textbooks decreases by 40% when the price of a textbook rises by 100%…
A: The degree to which the quantity of an item or service is responsive to a change in price is…
Q: Chapter 21: 1. The following diagram shows two budget lines: A and B. 10 9 1 a. b. 2 3 4 5 K 6 8 9…
A: "A budget line is a line which represents combinations of the two products which can be purchased at…
Q: 2. Evaluate the benefits of globalization and Western hegemony to our country. TITAS
A: Globalization is the process of bringing the world together and integrating it through trade and…
Q: The graph shows the market for cashews. What is the equilibrium price of cashews? What is the…
A: In a market, equilibrium is achieved at a point where demand curve is equal to supply. At this point…
Q: An integrated, combined cycle power plant produces 280 MW of electricity by gasifying coal. The…
A: The present value of a project or investment refers to its value at the time of investment in…
Q: From the end of 2007 to the end of 2008, M1 changed from $1,597 billion to $1,690 billion. By what…
A: The most liquid forms of money in an economy that is physical currency (banknotes and coins) held by…
Q: Suppose supply is P= ―3 + (2/5)Qs and demand is P= 51 ― (1/10)Qd. Further, suppose that each unit…
A: Externalities: When a firm produces a good sometimes it creates cost or benefits for other firms. If…
Q: An 8.5% account earns continuous interest. If $2500 is deposited for 5 years, what is the total…
A: As given interest rate = 8.5% Principal amount = $2500 Time = 5 years
Q: Consider the following production function. Y=K0.5N0.5. Consider K/N=1. Now consider a doubling of…
A: Production function: Y= K0.5 N0.5
Q: Please answer in business writing style How do changes in population demographics, such as an…
A: Demographic changes are among the most significant drivers of economic trends and can have profound…
Q: A city is spending $20.7 million on a new sewage system. The expected life of the system is 50…
A: The capitalised cost or worth of a specific project or investment provides an approximation of the…
Q: 36. A few years ago, there was a significant debate as to the effectiveness of providing an…
A: An organization or person may take on more risks if they are shielded from the repercussions of…
Q: Consider the hypothetical economies of Thalassa and Svarta, both of which produce crates of copia…
A: Productivity is an important economic concept that is used to measure a production efficiency of a…
Q: Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only…
A: Ike's bikes is a bicycle manufacturer. Currently, it produces all of its bicycles in one factory…
Q: P - LRAS Decrease in prices O Decrease in GDP O Decrease in consumption O Expansionary monetary…
A: Aggregate demand is a defined as the total quantity of goods and services that all the sectors of…
Q: Take the general case where your income is I, the price of coconuts is Pc and the price of…
A: Budget line shows the combination of two goods that can be purchased by spending all amount with…
Q: The following graph shows the short-run supply curve for pears.
A: The supply curve depicts the positive relationship between price and quantity supplied, keeping…
Q: Give me one 2 threats/opportunity of Jollibee corporation interms gross domestic products, with…
A: Jollibee Corporation, a multinational fast-food company, faces both threats and opportunities in…
Q: Give written answer with explanation and conclusion During 1989 a wave of political change swept…
A: The study and assessment of economic phenomena, such as markets, industries, policies, and human…
Q: Christian can watch hours of baseball (B) or hours of reality shows (R) on TV. Watching more…
A: Indifference curve: Indifference curve shows different combinations of 2 goods such that consumer’s…
Q: Coffee and creamer are complements. Climate changes resulted in a decrease in the coffee bean plant…
A: Compliments are the goods which are consumed jointly and used in fixed proportion of goods.
Q: Suppose you have $20 to spend on pizza and coke. Suppose you spent all your money and that the…
A: Budget constraints shows the relationship between two goods , it's prices and income of consumer.…
Q: Private property rights do not conflict with human rights. They are human rights. Private property…
A: According to Armen Alchian, a property right is "the right to determine the use of a resource,…
Q: Given that C-200 +0.75 Y, investment- $150, government spending $200. The equilibrium output(Y)…
A: Given information:- C = 200 + 0.75Y I = $150 Government spending = $200
Q: Trish earned a salary of $60,000 in 2002 and $80,000 in 2006. The consumer price index was 177 in…
A: CPI is the consumer price index. CPI is used to measure the inflation rate. Real value doesn't…
Q: Constructacashflowdiagramforthefollowing:$10,000outflowattime zero, $3000 per year inflow in years 1…
A: cash flow diagram A cash flow diagram is a financial system that is utilized to compute the profits…
Q: A new machine will cost $200,000. Its maximum useful life is 8 years. The expected market value (MV)…
A: In the header row of the pertinent table, the derivation of computations in each required column has…
Q: Describe the five (5) different types of legal systems within which international businesses may…
A: Therefore, the legal system must offer a means of ascertaining the veracity and justice of the…
Q: The total revenue and total cost functions are given as TR=500-0.000250² TC = 361250+5Q+0.00020²…
A: Total revenue is the product of price and quantity. Profit is the difference between total revenue…
Q: 6. The arguments for restricting trade Suppose there is a policy proposal to increase trade…
A: Trade restrictions are government policies and regulations that limit the flow of goods and services…
Q: The small nation of Capralia has an abundant stock of Pashmina goats, a breed that yields…
A: Equilibrium refers to the point where the demand curve intersects the supply curve.
Q: Suppose the economy is in short-run equilibrium. The of $4 trillion drives unemployment the…
A: Aggregate demand refers to the total demand for goods in an economy at a given price level. It is…
Q: 5. Which factor is used to convert part (a) of the cash flows shown below to part (b)? A=? ·N G 3 2G…
A: A gradient can be an arithmetic gradient or a geometric gradient.
Q: This question is based on the following consumption function: C = 300+ 0.4YD If the level of…
A: Consumption function is the sum of Autonomous consumption and consumption depending on income of…
Q: Countries with high per capita incomes are sometimes called affluent economies. Do these affluent…
A: Even though countries with high per capita incomes are often referred to as affluent economies, they…
Q: Suppose the price of tomatoes fell from $58 a crate to $22 a crate a typical tomato farmer supplies…
A: Price elasticity of supply is a widely applied concept in economics to study the sensitivity of the…
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 4 images
- Suppose that you are starting up a lawn-raking business. All of your workers are required to supply their own rakes, so the only cost to you is hiring labor at an hourty rate. Suppose that the market price of raking someone's yard is $50 per lawn and the hourly wage is $25 per hour. The following graph shows the production function (PF) for your business. On the following graph, use the green line (triangle symbol) to plot the daily isoprofit curve that indicates the profit-maximizing level of output. (Hint: Derive the slope of the isoprofit curve and then move the curve up or down until it's in the position you warnt; this is because you do not know the amount of profit that will yield the desired curve.) Then use the black point (plus symbol) to indicate the profit-maximizing level of labor and output per day. Note: You will not be graded on any adjustments made to the graph. 100 90 Isoprofit 30 Profit Max 40 FF 20 LABOR Hours per day LAWNS RAKED PER DAYWhat is the marginal physical productivity (MPP) of the inputs given the function Q=18x21+2x1x2+2x22 ? Select one: a. MPPx1=36x1+2x1MPPx2=2x1+4x1 b. MPPx1=36x1+2x1MPPx2=2x2+4x2 c. MPPx1=36+2x2+2MPPx2=2x1+4x2 d. MPPx1=36x1+2x2MPPx2=2x1+4x2In the Heckscher-Ohlin (H-O) model, Explain with the help of a graph the effect of an increase in the relative price of a labor-intensive good on input choice.
- a) What are the determinants of production? Explain.b) Suppose that an economy’s production function is in the Cobb–Douglas form with parameter α = 0.3. What is the production function equation? What does each component stand for?Question 13 5 pts For the production function y = 4x1+ 3x2, which of the two inputs is more productive when x1 is 10 and x2 is 10? X1 X 2 neither; for this situation, they have equal marginal products cannot tell from the above information Question 14 5 pts Given the production function y = x1 1/3 x,1/3, what is the marginal physical product of x2 when x1 is 5 and x2 is 5? O 0.75 37 0.19 O 1.11Suppose a soap-manufacturing production process is described by the following equation: Y = a + b log K + с log L Where, Y= Output (number of soaps produced) K=Capital L=Labor a, b and c are constants Suppose 0<a<1, 0< b<1 a. Find the Marginal Product of Labor (MPL) and Marginal Product of Capital (MPK) in the production of soap b. Is MPL diminishing, increasing or constant as L increases? c. Is MPK diminishing, increasing or constant as K increases?
- What is the marginal physical productivity (MPP) of the inputs given the function Q=12x21+2x1x2+2x22?Consider the following production function for shirts: q = v6 L3/4K/4, where L is worker-hours, and K is sewing machine-hours. a. Compute the marginal products of labor and capital, the average product of labor, and the marginal rate of technical substitution of labor for capital (i.e. how many units of capital are needed to make up for the loss of one unit of labor)? b. Are there diminishing returns to labor (that is, does the marginal product of labor decrease when labor L increases)? What about to capital? Is there diminishing marginal rate of technical substitution (MRTS)? с.SuperFashion produces specialty tops stitching two silk sleeves (S) to a knitted body (B). Stitching always takes 20 minutes of a seamstress time (L Silk sleeves can be produced using Labor (Ls) and silk fabric (F) according to the production function S = Ls1/3F2/3. Knitted bodies can be produced using labor (LB) and yarn (Y) according to the production function B = LB¹/4Y1/4, L is measured in hours. SuperFashion wishes to produce 10 specialty tops. 1. How many silk sleeves and how many knitted bodies does SuperFashion need to produce? Does this number depend on the cost of labor, silk fabric or yarn?
- A firm uses labor (L) and capital (K) to produce outputs. The following graph shows the iso-quant curves and iso-cost curves facing this firm. The iso-quant curves are the L-shaped curves. Suppose the wage rate of labor is $200 (per day) and the rental rate of capital is $100 (per day). What is the cost of producing 20 units of output (per day) when both labor and capital are variable inputs? Notice that both inputs are variable. alae-2 (3.6) -30 = 20 - 10 O 400 O 600 1000 1200 800For the Cobb-Douglas production function P and isocost line (budget constraint, in dollars), find the amounts of labor L and capital K that maximize production, and also find the maximum production. Then evaluate and give an interpretation for |å| and use it to answer the question. (a) Maximize P = 2000L3/5K2/5 with budget constraint 15L + 32OK = 8000. L = K = P = (b) Evaluate and give an interpretation for |21. Each additional dollar of budget increases production by this amount. (c) Approximate the increase in production if the budget is increased by $80. unitsUse a graph of labor input and its marginal product to argue that in the specific factors model(i.e. in the short run), an inflow of labor to a country reduces wages in the country. How are the rental rates of specific factors affected? see figure 5-2 in the slides. The rental rates of specific factors rise, because their marginal products rise due to an increase in labor intensity.