QUESTION 1 2 points Save Answer A farmer uses K units of machinery and L hours of labor to produce C tons of corn, with the production function, C=21,0-5K. The farmer currently uses L = 20 and K = 10. Suppose the input price ratio is wir = 1. What would you tell the farmer to do in order to minimize his cost of production given the current level of output? O a. You should use more ma O b. You should use less machinery and more labor. O c. You should use less bery and less labor. d. You should use more machinery and less labor. QUESTION 2 6 points Save Answer isocost Based on the information in the graph aboive, what is the slope of the isocost line? If the price of capital remains the same and the price of labor decreases, the isocost line will With the current mix of labor and capital, the marginal technical rate of subsitution is MRTS, =3. If the prices of labor and capital remain as shown in the graph, then the firm will minimize the cost of production by QUESTION 3 4 points Save Answer Joe owns a small coffee shop. His production function is q=280.5L where q is the number of cups of coffee produces, K is the number of coffee machines, and L is the n If K=10 and L=20, the margina Starting from 10 machines and 20 employees, if Joe hires one more employee, then he can use fewer machine(s) and still produce the same quantity of coffee. QUESTION 4 6 points Save Answer Joe's coffee shop faces an isocost curve given by C=10L+5K where L is the number of employees and K is the number of coffee machines. If Joe's total budget is 100 and he has 5 employees, he can afford machines. The slope of the isocost curve (with K on the y-axis) is For each additional employee, to keep his costs the same, Joe has to give up v machines QUESTION 5 6 points Save Answer Joe's coffee shop has the production function, = 480.50.5. If the price of labor, L. is 5 and the price of a machine. K, is 20, then, to minimize the cost of producing q=200 cups of coffee: Joe will employ L'= workers. Joe will use K*= machines. The total cost will be Suppose that a latte can only be produced by using exactly 1 ounce f the price of espresso is 0.50 per ounce and the price of milk is 0.10 per ounce? O C = 160q O C = 80q O C = 0.4q O C = 0.8q O C = 4q QUESTION 7 2 points Save Answer Suppose that the production function for t-shirts is given by = 1 0.50.5. If K is fixed at 4. What is the marginal product of labor? LO.S O 21 0.5 O 2 LO.S O 41 0.5 O LO.5 4 70.5 QUESTION & 2 points Save Answer Which of the following best describes the isoquants of the production function: q = 0.54+0.3K. O L-Shaped Linear and downward sloping O Linear and up-ward sloping Strictly Convex O Strictly Concave