2. A new tvpe of technology has been invented that allows the wvidget factory to
ID: 1131557 • Letter: 2
Question
2. A new tvpe of technology has been invented that allows the wvidget factory to produce widgets using capital instead of labor. The daily production choices faced by the firm are now: Workers Output MPL Capital (units) Output MPK 100 150 190 225 250 50 95 135 h 170 200 (a) Fill in a-j (b) If the daily wage is $100 per worker and the cost of a unit of capital per day is $60, how many workers and how many units of capital should the firm utilize in order to minimize the cost of producing 350 widgets?Explanation / Answer
2.
A.
B.
The labor and capital will be deployed on the basis of higher marginal product per unit of dollar.
On the basis of above tabular data and to produce 350 units of output,
It will be 2 unit of labor and five unit of capital to produce 350 units of widgets to minimize the cost.
At this level of input combination,
MPL per unit of dollar = MPK per unit of dollar (on the basis of equi-marginal principle)
Workers Output MPL Capital output MPK 0 0 0 0 1 100 100 1 50 50 2 150 50 2 95 45 3 190 40 3 135 40 4 225 35 4 170 35 5 250 25 5 200 30Related Questions
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