Activity 4 A (15 points) Reference: The Firm's Profit-Maximizing Choice by SR, pdf Part 1 - The ISOQUANT (15 points) Instruction: (see other instructions below, for the submission of answer sheet) A. Complete the Column for MRS. Show your solution for each answer, Number each solution that corresponds to each unknown MRS. B. Graph the Labor-Capital function, making sure that Labor units are in the horizontal a MRS = change in K/ change in L change in K = final K- initial K change in L = final L- initial L MRS = 26-30/2-1 MRS = -4/1 B. Graph the Labor-Capital function, making sure that Labor units are in the horizontal a MRS = change in / change in L change in K-final initial K change in L = final L- initial L MRS = 26-30/2-1 MRS-4/1 MRS-4 Units of Labor Capital MRS 30 O 2 26 -4 3 3 22.5 ) (1) Labor Capital MRS 1 30 O 2 26 -4 3 22.5 (1) 4 4 19.5 (2) 5 17 (3) 6 15 (4) 7 13.5 (5) 8 8 12.5 (6) 9 12 (7) 10 12 (8) Important: 1. Encode your computations on MS Word. No handwriting please. Important: 1. Encode your computations on MS Word. No handwriting please. 2. Do not copy the given, Submit only your numbered computations for MRS (1-8). 3. Do your graph on Excel then copy paste on MS Word, together with your computations. 4. Limit your answer sheet to only 1 page for Part 1. Not following instructions will get a 20% deduction. 5. Submit a PDF copy only See next page for Part II Part II - The ISOCOST (15 points) Let the Budget of the form for the inputs be designated as TC : in Pesos 48000 Let the Price of Labor be equal to wage (w) in Pesos 600 Let the price of capital be equal to rent (0) in Pesos 1200 Instructions: (This is similar to determining the budget line) 1. Specify the Isocost Equation by substituting the given values above into TC - WL+ rK; leave L & Kas is, do not replace yet. 2. Determine the endpoints by using : L - TC/w; K = TC/r. Show your solution. 3. Determine 5 more combinations between the endpoints by using the Isocost Equation specified above. Present the table for this as: Instructions: (This is similar to determining the budget line) 1. Specify the Isocost Equation by substituting the given values above into TC - WL+rk; leave L & Kas is, do not replace yet. 2. Determine the endpoints by using: L = TC/w; K - TC/r, Show your solution 3. Determine 5 more combinations between the endpoints by using the Isocost Equation specified above. Present the table for this as: Units of Labor Units of Capital (L) (K) 1a (endpoint) 1b. 2a 2b 3a b 4a 4b 5a 5b 6b 7a 7b (endpoint) 4. Construct a graph, where the vertical axis is labeled as the horizontal axis as L. 5a 1 5b 6a 6b 7a 7b (endpoint) 4. Construct a graph, where the vertical axis is labeled as K, the horizontal axis as L. 5. Plot the 7 combinations in the constructed graph. 6. Determine the slope of this Isocost, show your solution Important: 1. Encode your computations on MS Word. No handwriting please. 2. Do not copy the given, Submit only your numbered computations for the different combinations. (1a, 1b, 2a, 2b, 3a, 3b...... 7a, 7b) 3. Do your graph on Excel then copy paste on MS Word, together with your computations, 4. Limit your answer sheet to only one page for Part II. Not following instructions will get a 20% deduction 5. Submit a PDF copy only. Activity 4 A (15 points) Reference: The Firm's Profit-Maximizing Choice by SR, pdf Part 1 - The ISOQUANT (15 points) Instruction: (see other instructions below, for the submission of answer sheet) A. Complete the Column for MRS. Show your solution for each answer, Number each solution that corresponds to each unknown MRS. B. Graph the Labor-Capital function, making sure that Labor units are in the horizontal a MRS = change in K/ change in L change in K = final K- initial K change in L = final L- initial L MRS = 26-30/2-1 MRS = -4/1 B. Graph the Labor-Capital function, making sure that Labor units are in the horizontal a MRS = change in / change in L change in K-final initial K change in L = final L- initial L MRS = 26-30/2-1 MRS-4/1 MRS-4 Units of Labor Capital MRS 30 O 2 26 -4 3 3 22.5 ) (1) Labor Capital MRS 1 30 O 2 26 -4 3 22.5 (1) 4 4 19.5 (2) 5 17 (3) 6 15 (4) 7 13.5 (5) 8 8 12.5 (6) 9 12 (7) 10 12 (8) Important: 1. Encode your computations on MS Word. No handwriting please. Important: 1. Encode your computations on MS Word. No handwriting please. 2. Do not copy the given, Submit only your numbered computations for MRS (1-8). 3. Do your graph on Excel then copy paste on MS Word, together with your computations. 4. Limit your answer sheet to only 1 page for Part 1. Not following instructions will get a 20% deduction. 5. Submit a PDF copy only See next page for Part II Part II - The ISOCOST (15 points) Let the Budget of the form for the inputs be designated as TC : in Pesos 48000 Let the Price of Labor be equal to wage (w) in Pesos 600 Let the price of capital be equal to rent (0) in Pesos 1200 Instructions: (This is similar to determining the budget line) 1. Specify the Isocost Equation by substituting the given values above into TC - WL+ rK; leave L & Kas is, do not replace yet. 2. Determine the endpoints by using : L - TC/w; K = TC/r. Show your solution. 3. Determine 5 more combinations between the endpoints by using the Isocost Equation specified above. Present the table for this as: Instructions: (This is similar to determining the budget line) 1. Specify the Isocost Equation by substituting the given values above into TC - WL+rk; leave L & Kas is, do not replace yet. 2. Determine the endpoints by using: L = TC/w; K - TC/r, Show your solution 3. Determine 5 more combinations between the endpoints by using the Isocost Equation specified above. Present the table for this as: Units of Labor Units of Capital (L) (K) 1a (endpoint) 1b. 2a 2b 3a b 4a 4b 5a 5b 6b 7a 7b (endpoint) 4. Construct a graph, where the vertical axis is labeled as the horizontal axis as L. 5a 1 5b 6a 6b 7a 7b (endpoint) 4. Construct a graph, where the vertical axis is labeled as K, the horizontal axis as L. 5. Plot the 7 combinations in the constructed graph. 6. Determine the slope of this Isocost, show your solution Important: 1. Encode your computations on MS Word. No handwriting please. 2. Do not copy the given, Submit only your numbered computations for the different combinations. (1a, 1b, 2a, 2b, 3a, 3b...... 7a, 7b) 3. Do your graph on Excel then copy paste on MS Word, together with your computations, 4. Limit your answer sheet to only one page for Part II. Not following instructions will get a 20% deduction 5. Submit a PDF copy only