A profit-maximizing firm equates the marginal rate of technical substitution of two inputs to: the ratio of marginal products of the inputs and the ratio of the costs of these inputs. the marginal cost ratio of the good being produced. All of the choices None of the choices the price ratio of the good being produced. the ratio of the inputs cost that satisfies the ratio of highest marginal products of the inputs. O the ratio of marginal products of the inputs
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- A firms marginal cost curve above the average variable cost curve is equal to the films individual supply curve. This means that every time a firm receives a price from the market it will be willing to supply the amount of output where the price equals marginal cost. What happens to the films individual supply curve if marginal costs increase?The slope of an isocost line is equal to the Select one: O a. O b. and is negative of the ratio of input prices; constant decreases as we move down the line; the ratio of the marginal products O c. is constant; the ratio of the marginal products O d. increases as we move down the line; the ratio of input pricesConsider a firm that produces output using industrial robots and skilled labor. Suppose it is the case that a reduction in the price of industrial robots causes the firm's labor demand curve for skilled workers to increase (i.e., to shift to the right). This implies that: There is diminishing marginal product of robots. O There is diminishing marginal product of skilled labor. O Robots and skilled labor are complements. O Robots and skilled labor are substitutes. The unit cost of skilled labor is below the unit cost of robots.
- Which of the following diagrams shows a production function where the inputs are perfect substitutes? A X1 X1 X1 D X2 X1 D. O O O OEconomics Consider ADNOC decreasing the hourly wage rate (i.e., hourly salary) to all workers employed in her oil factories. Which of the following state OA All Cost curves, except the Fixed Cost, will shift upwards O B. All Cost curves, except the Fixed Cost, will shift downwards OC. All Cost curves (i.e., Fixed, Variable and Total) will shift upwards O D. All Cost curves (i.e., Fixed, Variable and Total) will shift downwardsPrunella raises peaches where L is the number of units of labor she uses and T is the number of units of land she uses. Her output is f(L,T) = LT bushels of peaches. Currently, the cost of land is 8, the wage for labor is 9, and the price of peaches is 10. Prunella is currently maximizing her profits. Which occurences would cause the quantity of labor used to decrease? O An increase in the price of peaches O A increase in the price of labor O An increase in the Marginal Product of Labor O All of the above
- What is the difference between accounting profit and economic prof? A Economic profit subtracts both explicit and implicit costs from total revenue, while acounting profit only subtracts explicit costs. OR Accounting proft only subtracts implicit costs from totsi revenue, while economic profit only subtracts explicit costs. OC Economic proft orly subtracts implicit costs from total revenue, while accounting profit only subtracts explicit costs. OD. Accounting proft suberacts both explicit and implicit costs from total revenue, while economic proft only subtracts explicit costsInnovations in technology that cause an increase in the marginal product of a resource will: O increase the marginal revenue product O increase the marginal resource cost O decrease the marginal revenue product decrease the demand for the resourceDiminishing marginal returns occur because O average and marginal relationships behave very differently with respect to each other. O workers in some industries lack an adequate formal education. O producers are not careful enough in the manufacturing process. O the efficiency of variable resources depends on the quantity of the fixed resources.
- 8. A firm's total cost function is given by TC = 3Q; +2Q,Q, + 7Q: Where Q, and Q. denotethe number of it ems of goods 1 and 2, respect ively that are produced. Using the substitution met hod, find the values of Q, and Q. which minimize costs if the firm is committed to producing 40 goods of eit her type in total.A chair manufacturer hires its assembly-line labor for $5 an hour and calculates that the rental cost of its machinery is $10 per hour. Suppose that a chair can be produced using 4 hours of labor or machinery in any combination. If the firm is currently using 2 hours of labor for every two hours of machine time, is it minimizing its cost of production? If so, why? If not, how can it improve the situation? The firm O A. is currently minimizing its cost of production because its marginal rate of technical substitution is greater than the ratio of input prices. O B. is not currently minimizing its cost of production because the ratio of the marginal product of labor to the marginal product of capital is less than the ratio of the wage rate to the rental cost. O C. is currently minimizing its cost of production because its marginal rate of technical substitution equals the ratio of input prices. O D. is not currently minimizing its cost of production because the marginal product of labor…Suppose that firms face the following production function: Q ==Inl +InK. What is the degree of elasticity of substitution? O 2/3 1/3 01 O infinity