4. Given the firm's current production process and desired level of output, the marginal product of labor is 200 and the marginal product of capital is 100. The current wage per hour is $12 and the current rate per machine hour is $2. Could the firm do better by using more of one input and less of the other? Using the numerical information show whether or not the firm can lower its cost. Do not just state an equality or inequality as evidence. Graphically depict the firm's current position.

4. Given the firm's current production process and desired level of output, the marginal product of labor is 200 and the marginal product of capital is 100. The current wage per hour is $12 and the current rate per machine hour is $2. Could the firm do better by using more of one input and less of the other? Using the numerical information show whether or not the firm can lower its cost. Do not just state an equality or inequality as evidence. Graphically depict the firm's current position.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter7: Production And Cost In The Firm

Section: Chapter Questions

Problem 3.9P

See similar textbooks

Similar questions

If two painters can paint 200 square feet of wall in an hour, and three painters can paint 275 square feet, what is the marginal product of the third painter?
Give the three reasons that explain why the division of labor increases an economys level of production.
What is the difference between a fixed input and a variable input?
What shapes would you generally expect a total product curve and a marginal product curve to have?
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?
What is a production function?
Suppose you have a team of two workers: one is a baker and one is a chef. Explain why file kitchen can produce more meals in a given period of time if each worker specializes in what they do best than if each worker tries to do everything from appetizer to dessert.
What is the difference between economies of scale, constant returns to scale, and diseconomies of scale?
Retune to Table 7.2. In the top half of the table, at what point does diminishing marginal productivity kick in? What about in the bottom half of the table? How do you explain this?
A common name for fixed cost is overhead. If you divide fixed cost by the quantity of output produced, you get average fixed cost. Supposed fixed cost is 1,000. What does the average fixed cost curve look like? Use your response to explain what spreading the overhead means.
What are the factor payments for land, labor, and capital?