Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 1: Supply [9 Marks: 1.2.1.2,3] Carmaker produces small cars. As production emits pollution. Cannaker needs to buy:r pollution permits. It also needs to hire

image text in transcribed
Question 1: Supply [9 Marks: 1.2.1.2,3] Carmaker produces small cars. As production emits pollution. Cannaker needs to buy:r pollution permits. It also needs to hire labour. Carmaker's production function is given by: (1) q = min {c.osL. Em}, where E denotes the number of pollution permits. L denotes the amount of labour and min{a,b} denotes the minimum function where min{a,b} = a if a s b and min {a,b} = b if a e b. (a) [1 mark] Draw the isoquant corresponding to q = '10 in a clearly:r labelled diagram where L is in the xaxis and E is in the yaxis. Label two pairs of E and L in the diagram which give (1 = H). (b) [2 marks] 1|.r'lfhat is the marginal product of L and the marginal product of E when L = 40 and E = 1GB? Does the production function {1) exhibit constant returns to scale for all L 2:- DandEa-U

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

The Worldly Philosophers The Lives, Times And Ideas Of The Great Economic Thinkers

Authors: Robert L Heilbroner

7th Edition

068486214X, 9780684862149

More Books

Students also viewed these Economics questions

Question

What is the APR?

Answered: 1 week ago

Question

Know the components of a position description

Answered: 1 week ago

Question

Explain the value of a true open-door policy

Answered: 1 week ago