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[30 points] Assume a car manufacturing company hires two kinds of labours. Programmers are twice as efficient as Mechanical Engineers. The production functions of the
[30 points] Assume a car manufacturing company hires two kinds of labours. Programmers are twice as efficient as Mechanical Engineers. The production functions of the car manufacturing is: Q = 10 (2Lp Lm) Where output is measured in unit car, labour is measured in days, Lp is the number of days of Programmers labour hours and Lm is the number of days of Mechanical Engineers labour hours. a) [10 points] Draw the Isoquant of the company (label axes carefully) b) [10 points] Wage rate of Programmers is $1000 per day and wage for Mechanical Engineers is $600 per day. Draw the Isocost line. (label axes carefully) c) [10 points] Show the profit-maximizing input choice where profit-maximizing output choice is 10000 cars. Draw a graph and show the Scale and Substitution effect if the wage of Mechanical Engi- neer falls to $250 per day. What does the demand curve of Mechanical Engineer look like (label axes and points carefully)
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