Question tint Consider the same information in question 83 {same relative prices. production function. and output target}. what happens to the total cost of production when the firm switches to a more productive technology. moving from A = 18 to .4' = :14]? Assume there are no xed costs. {ai The total production changes from L' = $28 to E." = $48 {b} The total production changes from C = $48 to If.\" 2 $28 {c} The total production changes from E\" = $48 to E.\" = $88 {d} The total production changes from 1'.\" = $88 to C\" = $48 Question 0-5 The table below is a modified version of Table 6.1 in the textbook. Hint: 1r"ou con odopt the spreadsheet you creotedfor the lost quiz to answer the next questions. Capital Labor Output It L o 8 I3 8 8 1 E 8 2 13.5 8 3 23.5 8 4 31 8 5 3? 8 E 42 8 ? 46 8 8 48 8 5| 51:1 8 18 53.4 Let r = $28I be the price of one unit of capital. and W = $158 be the price of one unit of labor. Assume the table represents the production technology:r of a firm. Consider the production decisions ofthis rm in the short run. Which of the following alternatives is correct? {ai whenthe price isp = $6. the firm produces 23.5 units {b} Whenthe price isp = $8. the rm produces 81 units {cl Whenthe price isp = $8. the rm produces 13.5 units {d} Whenthe price isp = $18. the firm produces ti units. Question no Consider the same information in question I35 and. again. the production decisions of this rm in the short run. Which of the following alternativE is correct? {a3 When the price isp = $8. the firm makes zero profits lit\" = Li] {b} when the price isp = $8. the rm loses $1881negative prot is it\" = 1co} {cl When the price isp = $8. the rm loses $152 [negative prot is it\" = 152} [d] When the price is p = $18. the firm earns $TD [positive profit is it\" 2 TD] \fQuestion 01 A firm produces a single good using capital and labor as inputs. Its production function is q = f[K,L) = AKC'LIG and the marginal products of capital and labor are q q MP = , MP = . K \"K L 3:. Let 'r' = $5 be the price of one unit of capital. Assume that {I = 1.;'3' = 2, and A = 10. Assume also that the firm wants to produce E = 1,250 units. If the firm is minimizing costs bv using the same amounts of capital and labor [K = L], how much is w, the price of labor? {a} w = $5 {bl w = $10 {c} w = $15 {d} w = $20 Question 02 Consider the same information in question 02. The government can impose different taxes on this firm. Assume the firm sells all units it produces. Which of the following alternatives is correct? {a} A tax of $1 per unit of capital used would make the firm increase K'\" and reduce L' {b} A tax of $2 per unit of labor used would make the firm increase L\" and reduce K" {c} A tax of $3 per unit of output sold would make the firm increase both R\" and L" {d} A tax of $4 per unit of output sold would not change the firm's optimal input mix x\K [.'[l.':ll;'|'.ll rmmsr rm! bonsai: / f -'.-' -'(1|.-'L Efll w Question 11 Consider the same information in question 10. Sketch a graph of the firm's isooost line at the current prices and output level {w = 25,1" = ID. if = LUUIEI]. Place capital {Kl in the vertical axis. Let C be the total cost associated with vour isocost {its level on the implicit third axis]. Suppose the price of labor changes to w\" = 15. In your graph, draw a new isocost line associated with the same total cost if as before, but reflecting the new price of labor. Finallv, draw a new isoquant reflecting the level of output, ', that can be produced ff the firm incurs in this same total cost if at the new price levels. Which of the following alternatives '5 correct? {al The new isoquant has the same shape as the previous one, but has shifted tothe left {b} The new isoouant touches the new isocost line in a point on the itsdegree line [H = L] {cl The new isocost line has the same slope as the previous one, but has shifted to the right {d} The new isocost line has the same xinteroe pt but a different vintercept Question 12 Consider the same information in questions 10 and 11. In particular, consider that the rm has the same technology.r and that the price of capital has remained at r = If} whilethe price of labor changed from w = 25 to w\" = 15. Before the price change, the firm was producing, E = Luti units of output at the total cost of E dollars. After the price change, if the firm spends the same C dollars, it will produce o'units of output. 1Which of the following alternatives is correct? {al The firm will produce the same output as before, a\" = 1?, using K' = L' 2 2t] {b} The firm will produce the same output as before, E' = 4?, using it" = L' -=: 2U {c} The firm will produce more output than before, 4? 2::- o, using it." = L' :2- 2t] {d} The firm will produce more output than before, 4? ::~ s, using it" = 2t], and L' :5- 2D