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Exercise 3 Me

The document presents a production table with maximum output levels for combinations of capital and labor. It asks to calculate marginal product, average product, marginal revenue product and output elasticity of labor when capital is 3 units and labor is 1.5 units. It also asks how many units of labor the firm should hire if the wage is $21 and how much output it should produce.

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48 views3 pages

Exercise 3 Me

The document presents a production table with maximum output levels for combinations of capital and labor. It asks to calculate marginal product, average product, marginal revenue product and output elasticity of labor when capital is 3 units and labor is 1.5 units. It also asks how many units of labor the firm should hire if the wage is $21 and how much output it should produce.

Uploaded by

aleenz0784
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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Othman Yeop Abdullah Graduate School of Business Universiti Utara Malaysia SEEG51 ! Mana"erial Economics E#ercise $!

Problems 1% &he table belo' presents estimates of the ma#imum levels of output possible 'ith various combinations of t'o inputs% (apital )*+ 5 4 3 2 1 11 1 / 5 1 1 ,5 ,! 1/ 11 . 2 !!! ,5 10 / 3 1abor )1+ ..1 ! , 1 4 51 .. !. ,, 11 5

Assume that a unit of output sells for 2, and that the firm currently employs t'o units of capital )* 3 ,+% )i+ )ii+ )iii+ )iv+ 4hat is the mar"inal product of labor 'hen 1 3 .5 4hat is the avera"e product of labor 'hen 1 3 .5 4hat is the mar"inal revenue product of labor 'hen 1 3 .5 4hat is the output elasticity of labor 'hen 1 3 .5 6f the 'a"e rate of labor is 21 7 ho' many units of labor should the firm hire and ho' many units of output should it produce5

,%

&he table belo' presents estimates of the ma#imum levels of output possible 'ith various combinations of t'o inputs% (apital )*+ 5 4 3 2 1

11 1 / 5 1 1

,5 ,! 1/ 11 . 2

!!! ,5 10 / 3 1abor )1+

..1 ! , 1 4

51 .. !. ,, 11 5

Assume that a unit of output sells for 2! and that the firm currently employs three units of capital )* 3 !+% )i+ )ii+ )iii+ )iv+ 4hat is the mar"inal product of labor 'hen 1 3 .5 4hat is the avera"e product of labor 'hen 1 3 .5 4hat is the mar"inal revenue product of labor 'hen 1 3 .5 4hat is the output elasticity of labor 'hen 1 3 .5 6f the 'a"e rate of labor is 21,7 ho' many units of labor should the firm hire and ho' many units of output should it produce5

!%

A firm 'ants to minimi8e the cost of producin" ,7/ units of output per 'ee9% 6t has hired a production en"ineer to identify alternative production technolo"ies that 'ill accomplish this "oal% &he production technolo"ies use the different combinations of capital )*+ and labor )1+ that are listed belo'% * 1 1 / : : / 11 1. 0 1/ 5 ,! . ! ! . , 55 1 / / : 1

Assume that the rental price of capital is 25 and the 'a"e rate of labor is 2.% ;etermine the minimum cost of producin" ,7/ units of output and then sho' ho' the combination of inputs that yield the minimum cost can be determined usin" the mar"inal approach% .% ;urin" the last fe' days the Superior (ompany has been runnin" into problems 'ith its computer system% &he last run of the production cost schedule resulted in the incomplete listin" sho'n belo'% <rom your 9no'led"e of cost theory7 fill in the blan9s% = &( . 1 , ! . 5 0 ???? ? ???? ? ???? ? ???? ? ???? ? ???? ? ???? &<( ???? ? ???? ? ???? ? ???? ? ???? ? ???? ? ???? ? ???? &>( ???? ? ???? ? , ???? ? ???? ? . ???? ? ???? A&( # 5, ???? ? ,1%!! ???? ? ???? ? 15%0????
2

A<( # ???? ? ???? ? ???? ? ???? ? ???? ? ???? ? ????

A>( # ???? ? ???? ? ???? ? ???? ? ???? ? ???? ? 1

M( # ???? ? ???? ? ???? ? . ???? ? ???? ? ????

/ : 1

? ???? ? ???? ? ???? ?

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? :0 ???? ? ???? ?

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???? ? 15 ???? ?

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