ECON 208 Chapter 8 || WELL-ENLIGHTENED WITH SOLVED SOLUTIONS!!
6 views 0 purchase
Course
ECON 208
Institution
ECON 208
When there is no other way of producing a given level of output with a smaller total value of
inputs, the firm is operating at correct answers minimum cost
By expressing the cost-minimizing condition as MPK/MPL = PK/PL, we are able to see correct answers how the firm can adjust the marginal pro...
ECON 208 Chapter 8 || WELL-ENLIGHTENED WITH
SOLVED SOLUTIONS!!
When there is no other way of producing a given level of output with a smaller total value of
inputs, the firm is operating at correct answers minimum cost
By expressing the cost-minimizing condition as MPK/MPL = PK/PL, we are able to see
correct answers how the firm can adjust the marginal products of the factors of production to
the prices of the
factors given by the market
For a firm with only two inputs, capital and labour, the condition MPK/MPL = PK/PL
guarantees that the firm is correct answers minimizing its costs but is not necessarily
maximizing its profits
A profit-maximizing firm will increase its use of capital and decrease its use of labour when
the correct answers marginal product of capital, per dollar spent on capital, is greater than the
marginal product of
labour, per dollar spent on labour
When a firm seeks to minimize costs of producing a given level of output, it does NOT need
to know correct answers the level of output that maximizes its profits
A cost-minimizing firm will increase its use of labour and decrease its use of capital when
the correct answers marginal product of capital, per dollar spent on capital, is less than the
marginal product of
labour, per dollar spent on labour
The principle of substitution plays a central role in resource allocation because it
demonstrates that correct answers relative factor prices reflect relative scarcities of factors in
the economy and so firms will find
it profitable to make abundant use of relatively abundant factors
Suppose that a firm is using 100 units of labour and 50 units of capital to produce 200
completed client tax returns per day. The price of labour is $10 per unit and the price of
capital is
$5 per unit. The MPL equals 2 and the MPK equals 5. In this situation, correct answers the
firm could lower its production costs by decreasing labour input and increasing capital
input
Suppose that a firm is using 100 units of labour and 50 units of capital to produce 200
completed client tax returns per day. The price of labour is $5 per unit and the price of capital
is
$2 per unit. The MPL equals 5 and the MPK equals 2. In this situation, the firm correct
answers is minimizing its costs
Consider a firm that uses only labour and capital as inputs. At the present use of labour and
capital, the MP of labour is four times the MP of capital, and the price of labour is twice the
price
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ProPerfomer. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $9.99. You're not tied to anything after your purchase.
