O The exam is of forty-five points, ulh ime allowed is one hour and fifty minute
ID: 1134605 • Letter: O
Question
O The exam is of forty-five points, ulh ime allowed is one hour and fifty minutes. I. Assume that a firm spends $1,000 on two inputs, labor (graphed on the horizontal ) and capital (graphed on the vertical axis). If the wage rate is $15 per hour and the rental cost of capital is $20 per hour, the slope of the isocost curve will be A) (15 20)/1000. B) 1000. C) -20/15. -15/20. A firm employs 100 workers at a wage rate of $10 per hour, and 50 units of capital at a rate of $21 per hour. The marginal product of labor is 3, and the marginal product of capital is 5. The firm (1) A) is B) could reduce the cost of producing its current output level by employing more capital and less labor. 2. producing its current output level at the minimum cost. could reduce the cost of producing its current output level by employing more labor and less capital. D) could increase its output at no extra cost by employing more capital and less labor. The perfectlyExplanation / Answer
Ans1) your answer is correct. -15/20
Slope = - wage rate / cost of capital = - 15/ 20
Ans2) your answer is correct. Could reduce the cost of producing its current level by employing more labor and less capital
Marginal product of labor / marginal product of capital = 3/5 = 0.6
Price of labor / Price of capital = 10 / 21= 0.48
Sine MRTS is greater than the price ratio, cost can be minimized by putting more labor and less capital
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