- Questions Part 1 Of A 2 Part Question The Following Diagram Shows A Representative Production Isoquant For Midge S Widg 1 (148.47 KiB) Viewed 35 times
- Questions Part 1 Of A 2 Part Question The Following Diagram Shows A Representative Production Isoquant For Midge S Widg 2 (156.23 KiB) Viewed 35 times
- Questions Part 1 Of A 2 Part Question The Following Diagram Shows A Representative Production Isoquant For Midge S Widg 3 (288.13 KiB) Viewed 35 times
- Questions Part 1 Of A 2 Part Question The Following Diagram Shows A Representative Production Isoquant For Midge S Widg 4 (280 KiB) Viewed 35 times
Questions Part 1 of a 2-part question: The following diagram shows a representative production isoquant for Midge's Widget Company. Each point on the isoquant represents a (long-run) combination of labor (L) and capital (K) that Midge's can combine to produce q=100 widgets. K q=100 A B L If Midge's Widget Company were to move from point A to point B along this production isoquant, each of the following would necessarily decrease except: O the amount of K used to produce widgets.
q=100 A B If Midge's Widget Company were to move from point A to point B along thiſ production isoquant, each of the following would necessarily decrease except: the amount of K used to produce widgets. the marginal rate of technical substitution (L for K). o the marginal product of L. O Midge's cost of production. There are no exceptions, each of these necessarily decreases.
Question 10 Part 2 of a 2-part question: Following up on the preceding question, now assume that Midge's Widget Company pays w for each unit of L and r for each unit of K. Rather than focus on the single isoquant pictured above, consider a large number of production isoquants, each representing a different output level that Midge's might choose. As Midge's moves along its upward-sloping long-run output expansion path, O output increases. O more L and more K are used to produce output. O the ratio of input prices (w/r) stays unchanged. o the marginal product of labor divided by the price of labor (MP_/w) equals the marginal product of capital divided by the price of capital (MPK/r).
Part 2 of a 2-part question: Following up on the preceding question, now assume that Midge's Widget Company pays w for each unit of L and r for each unit of K. Rather than focus on the single isoquant pictured above, consider a large number of production isoquants, each representing a different output level that Midge's might choose. As Midge's moves along its upward-sloping long-run output expansion path, O output increases. more L and more K are used to produce output. O the ratio of input prices (w/r) stays unchanged. O the marginal product of labor divided by the price of labor (MP_/w) equals the marginal product of capital divided by the price of capital (MPK/r). O each of the preceding conditions holds.