2. Suppose the wage rate for labor is $20 an hour andthe rental rate for capital is $50 per hour. Basedon this information, please answer the questionsappearing below the graph.Capital80706050403020101,000 cases10 20 30 40 50 60 70 80Labora. Draw the iso-cost line associated with anhourly budget of $1,000.b. What is the least-cost level of capital and laborthis business should utilize when packaging1,000 cases of fruit juice? How did you arriveat this answer?

Isocost curves are those curves that represent those combinations of inputs that can produce a given…

2. Suppose the wage rate for labor is $20 an hour and the rental rate for capital is $50 per hour. Based on this information, please answer the questions appearing below the graph. Capital 80 70 60 50 40 30 20 10 1,000 cases a. 10 20 30 40 50 60 70 80 Labor Draw the iso-cost line associated with an hourly budget of $1,000. b. What is the least-cost level of capital and labor this business should utilize when packaging 1,000 cases of fruit juice? How did you arrive at this answer?

2. Suppose the wage rate for labor is $20 an hour and the rental rate for capital is $50 per hour. Based on this information, please answer the questions appearing below the graph. Capital 80 70 60 50 40 30 20 10 1,000 cases a. 10 20 30 40 50 60 70 80 Labor Draw the iso-cost line associated with an hourly budget of $1,000. b. What is the least-cost level of capital and labor this business should utilize when packaging 1,000 cases of fruit juice? How did you arrive at this answer?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 42P: A small company that shovels sidewalks and driveways has 100 homes signed up for its services this...

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A small company that shovels sidewalks and driveways has 100 homes signed up for its services this winter. It can use various combinations of capital and labor: intensive labor with hand shovels, less labor with snow blowers, and still less labor with a pickup truck that has a snowplow on front. To summarize, the method Choices are: Method 1: 50 units of labor, 10 units of capital Method 2: 20 units of labor, 40 units of capital Method 3: 10 units of labor, 70 units of capital If hiring labor for the winter costs $100/unit and a unit of capital costs 400, what is the best production method? What method should the company use if the cost of labor rises to $20/unit?
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If capital and labour are perfect complements then the marginal products of capital and labour are undefined A True Faise Question 16 A firm uses 10 units of labour and 20 units of capital to produce 10 units of output. The marginal product of labour is 0.5. If there are constant returns to scale the marginal product of labour must be 0.25 True B False Question 17 Afirm uses 10 units of labour and 30 units of capital to produce 10 units of output. The marginal product of labour is 05. If there are constant returns to scale the marginal product of labout must be 0.25 A True False
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4:34 D *3 all 100% I 2. 3 When the inputs price ratio (slope of cost line) is greater than the MRTS, (MPK/PK > MPL/PL) the producer should use .. to minimize the cost. A More labar C Mare labor and more capital B More Capital D| None of the above 4 The optimal production method A maximizes output regardiess of cost C minimizes the normal rate of return B| maximizes inputs. Dminimizes cost 5. Refer to the information provided in the following figure, If this firm's cost of labor is $10 per unit, and the isocost line represents a total cost 2000. How much is the cost of capital per unit? 100 q-300 -200 -100 200 Units of labor Linits of capital