1 answer

13. Suppose the technology of a producer is described by the production function f(',k) = 20€škš....

Question:

13. Suppose the technology of a producer is described by the production function f(,k) = 20€škš. If the price of labour is w

13. Suppose the technology of a producer is described by the production function f(',k) = 20€škš. If the price of labour is w=$1 and the price of capital is r=$4, what is the cost of producing 20 units of output? (Note: for this technology, MPL = 82 sks and MPK = 8£$* $.) 14. Suppose the technology of a producer is described by the production function x = min{4, 4k}. If the price of labour is w=$1 and the price of capital is r=$2, what is the cost of producing 20 units of output? 15. Suppose labour and capital are perfect complements in production. More precisely, suppose the production function is x = min{1,2k}. Suppose the producer is currently facing a price of labour w=$1, and she is currently using bundle (1,k) = (4,2), which allows her to produce 4 units of output. What is the increase in the cost of producing 4 units of output if w increases to $2 (and the price of capital remains unchanged)? 16. Suppose you are told that the cost function of a given producer is given by Clw,r,x)=wrx?. (In this case, MC(x)=2wrx.) Then you can conclude that the technology of that producer is characterized by: a. constant returns to scale b. decreasing returns to scale C. Increasing returns to scale d. There is not enough information to answer 17. Suppose you know that the cost function is Clw,r,x)=wrx? and w=r=$2. Then you can conclude that the lowest cost of producing 3 units of output is $40. a. True b. False because we can conclude that the lowest cost of producing 3 units is not $40 c. False because we would need to know the TRS to find the lowest cost of producing 3 units d. False because we would need to know the output price to find the lowest cost of producing 3 units

Answers

solution: Question is k 6:20 25 4/5 MRTS rife 8 2 3/5 125 MPK 82 25 X 3 T MPL w ll MPK slope do iso quent - slope as cost comQuestion in Given that Ma Min {l, uk Azl auk 25 d=20] || -99 Ca law + Keo - 2014 +5x2 -20 +10 C = 30$ Question is Given thatQuestion16 option D is correct because there is no enough information a available Question 17. option B is correct because th

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