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Microeconomics
The Economic Planning Department of Haryana Chemicals Ltd. has used regression analysis to estimate the firm's production function as In Q = 3 + 0.25 In K + 0.75 In L where "In" denotes the natural logarithm of the variable.
a. Convert this production back to its original (i.e., multiplicative or Cobb- Douglas) form( HINT: find the antilogarithm of both sides of the equation).
b. if the capital stock is fixed at 16, the price of labour is Rs. 200 per unit, and the price of the firm's only product, sulfuric acid, is Rs.10 per unit, determine the rate of labor input that will maximize the firm's profit.
a. Convert this production back to its original (i.e., multiplicative or Cobb- Douglas) form( HINT: find the antilogarithm of both sides of the equation).
b. if the capital stock is fixed at 16, the price of labour is Rs. 200 per unit, and the price of the firm's only product, sulfuric acid, is Rs.10 per unit, determine the rate of labor input that will maximize the firm's profit.
Microeconomics
The marginal product of labor function for International Trading Inc. is given by the equation: MPL(sub-L) = 10 *(K^0.5/L^0.5)
Currently, the firm is using 100 units of capital and 121 units of labor. Given the very specialized nature of the capital equipment, it takes six to nine months to increase the capital stock, but the rate of labor input can be varied daily. If the price of labor is $10 per unit and the price of output is $2 per unit, is the firm operating efficiently in the short run? If not, explain why, and determine the optimal rate of labor input.
Currently, the firm is using 100 units of capital and 121 units of labor. Given the very specialized nature of the capital equipment, it takes six to nine months to increase the capital stock, but the rate of labor input can be varied daily. If the price of labor is $10 per unit and the price of output is $2 per unit, is the firm operating efficiently in the short run? If not, explain why, and determine the optimal rate of labor input.
Microeconomics
Suppose the price of one unit of labor is Rs. 10 and the price of a unit of capital is Rs. 2.50.
a. Use this information to determine the isocost equations corresponding to a total cost of Rs. 200 and Rs. 500.
b. Plot these two isocost lines on a graph.
c. If the price of labor falls from Rs. 10 per unit to Rs. 8 per unit, determine the new Rs. 500 isocost line and plot it on the same diagram used in part (b).
a. Use this information to determine the isocost equations corresponding to a total cost of Rs. 200 and Rs. 500.
b. Plot these two isocost lines on a graph.
c. If the price of labor falls from Rs. 10 per unit to Rs. 8 per unit, determine the new Rs. 500 isocost line and plot it on the same diagram used in part (b).
Microeconomics
For the production function Q = 20k0.5L0.5 determine four combination of capital and labor that will produce 100 and 200 units of output. plot these points on a graph and use them to sketch the 100- and 200- units isoquants.
Microeconomics
The production function for Superlite Sailboats, Inc., is
Q = 20K0.5L0.5
with marginal product functions
MPK=10L0.5K-0.5 and MPL=10K0.5L-0.5
a. If the price of capital is $5 per unit and the price of labor is $4 per unit, determine the expansion path for the firm.
b. The firm currently is producing 200 units of output per period using input rates of L=4 and K=25. Is this an efficient input combination? Why or why not? If not, determine the efficient input combination for producing an output rate of 200. What is the capital-labor ratio?
c. If the price of labor increases from $4 to $8 per unit, determine the efficient input combination for an output rate of 200. What is the capital-labor ratio now? What input substitution has the firm made?
Q = 20K0.5L0.5
with marginal product functions
MPK=10L0.5K-0.5 and MPL=10K0.5L-0.5
a. If the price of capital is $5 per unit and the price of labor is $4 per unit, determine the expansion path for the firm.
b. The firm currently is producing 200 units of output per period using input rates of L=4 and K=25. Is this an efficient input combination? Why or why not? If not, determine the efficient input combination for producing an output rate of 200. What is the capital-labor ratio?
c. If the price of labor increases from $4 to $8 per unit, determine the efficient input combination for an output rate of 200. What is the capital-labor ratio now? What input substitution has the firm made?
Microeconomics
The production function for Baroda Foods Ltd. is
Q = 30K 0.5 L 0.5
The initial prices of the input are W = 20 and r = 30.
Under the labor contract with a national union, at least the current employment level of 300 workers must be maintained through the next production period. ( However, more workers can be hired if necessary).
( a) in the previous production period, the firm produced 4,899 units of output. Assuming efficient production, what was the rate of capital input ?
( b) Because of the national recession, the desired level of output for the next production period is only 4,000 units. what is the optimal rate of capital input ?
Q = 30K 0.5 L 0.5
The initial prices of the input are W = 20 and r = 30.
Under the labor contract with a national union, at least the current employment level of 300 workers must be maintained through the next production period. ( However, more workers can be hired if necessary).
( a) in the previous production period, the firm produced 4,899 units of output. Assuming efficient production, what was the rate of capital input ?
( b) Because of the national recession, the desired level of output for the next production period is only 4,000 units. what is the optimal rate of capital input ?
Microeconomics
Royal steels Ltd. manufactures metal office furniture with the following production function :
Q = 20K 0.1 L 0.9
The firm currently is producing efficiently using 20 units of capital and 50 units of labor
( a) what is the rate of output ?
( b) What are the relative prices of capital and labor ( i.e., what is the ration of the two input prices?) can u determine the actual price of labor and capital ? Explain
(c) if output sells for Rs. 200 per unit, can you determine the firm's profit? why or why not ?
Q = 20K 0.1 L 0.9
The firm currently is producing efficiently using 20 units of capital and 50 units of labor
( a) what is the rate of output ?
( b) What are the relative prices of capital and labor ( i.e., what is the ration of the two input prices?) can u determine the actual price of labor and capital ? Explain
(c) if output sells for Rs. 200 per unit, can you determine the firm's profit? why or why not ?
Microeconomics
Given the production function Q = 30K 0.7 L 0.5 and input prices r = 20 and w = 30.
( a) Determine an equation for the expansion path
( b) What is the efficient input combination for an output rate of Q = 200? For 500?
( a) Determine an equation for the expansion path
( b) What is the efficient input combination for an output rate of Q = 200? For 500?
Microeconomics
France and Italy are major producers of wine. Workers in France go on strike. Show the effect on the price and quantity of the market for French wine. Also, show the effect of the situation on the price and quantity of the market for Italian wine. Explain in words and graphically.
Microeconomics
Px = $2, Py = $1, and income of $15
