Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2.For the production function, U=50K 0.7 L 0.3 and where the wage rate = 10 and capital rental rate = 20 . The desired output

2.For the production function, U=50K0.7L0.3and where the wage rate = 10 and capital rental rate = 20 . The desired output quantity is 440.96. Please answer the following

a.Graph the isoquant curve for the firm. your graph needs to be accurate and to scale, the solution for equilibrium will be by reading values from your graphs.

b.On the same graph as above, graph the isocost line and write the equation for it and determine the total cost of production.

c.On the graph identify the optimal level capital and labor to be used.

d.Determine marginal product of labor based on answer in c.

e.Determine the marginal product of capital based on the answer from c

f.Calculate and show your work for marginal rate of technical substitution based on the answers obtained from question c. Derive an equation for the MRTS in terms of K and L.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Economics Theory and Policy

Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz

9th Edition

978-0132146654, 0132146657, 9780273754091, 978-0273754206

More Books

Students also viewed these Economics questions

Question

Tell the merits and demerits of Mendeleev's periodic table.

Answered: 1 week ago