Consider a firm that produces output using industrial robots and skilled labor. Suppose it is the casethat a reduction in the price of industrial robots causes the firm's labor demand curve for skilledworkers 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.

In a market, when two inputs are used in the production process, any change in the cost.of employing…

Answered: Consider a firm that produces output…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter11: The Firm: Production And Costs

Section: Chapter Questions

Problem 8P

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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 O
What is the effect if the cost of labor increases? O Price increases, quantity increases O Price decreases, quantity decreases O Price decreases, quantity increases O Price increases, quantity decreases
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 prices
4. What must the relationship between marginal productivities and input prices if a firm is not choosing the optimal bundle of inputs but instead is hiring too much labor relative to the optimum?
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
A small specialty cookie company, whose only variable input is labor, finds that the average worker can produce 100 cookies per day, the cost of the average worker is $32 per day, and the price of a cookie is $1.00. Is the firm maximizing profit? The firm O A. is not maximizing profit because the marginal revenue product of labor is greater than the wage. O B. is not maximizing profit because the marginal revenue product of labor is less than the wage. O C. is maxinmizing profit because the marginal product of labor is greater than the wage. O D. is not maximizing profit because the price of the output is not equal to the wage. O E. is not maximizing profit because the marginal product of labor is greater than the wage.
In the Cost Minimization Problem, the isoquant curve for an output level equal to the output quota? Illustrates the cost of labor and capital a firm pays to produce a level of output in excess of an output quota. Illustrates all combinations of labor and capital that a firm cannot afford. Illustrates all combinations of labor and capital that a firm can afford. O Illustrates all combinations of labor and capital that a firm can use to produce a level of output equal to the output quota.
Innovations 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 resource
Prunella 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
A manager hires labor and rents capital equipment in a very competitive market. Currently the wage rate is $7 per hour and capital is rented at $11 per hour. If the marginal product of labor is 65 units of output per hour and the marginal product of capital is 55 units of output per hour, should the firm increase, decrease, or leave unchanged the amount of capital used in its production process? O The firm should leave capital unchanged. O The firm should increase capital. O The firm should decrease capital.
Brian uses wool (K) and labour (L) to produce t-shirts (q). The production function is: q = min{1/3L, 2K}. The inputs are perfect complement.If he uses 0.5 kg of wool and 3 hours of labour, he can produce 1 t-shirt. The pice of wage per hour is given by w=$10 and the price of each kg of wool is given by r=$4. What is the long run total cost function, C(q)? Sketch it on the diagram.
A firm's demand for labor will increase if the O marginal product of labor decreases. O price of the firm's output increases. O wage rate rises. O price of the firm's output decreases.

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