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Unformatted text preview: 1 Rice University E C O N 211, Fall 2007 Problem Set 5 Due on Thursday/Friday, October 11/12 1. (20 pts.) Consider two corporations: Toyota and the Gap. Would the short-run time period be the same for each of these firms? Explain your reasoning. 2. (20 pts.) Suppose the marginal product of labor is greater than the average product of labor at a firms current level of employment. Is the average product of labor increasing, decreasing, or constant? Explain your answer using a graph. Is this firms marginal cost greater than, less than, or equal to its average variable cost? Explain your reasoning. 3. (20 pts.) Each extra worker produces an extra unit of output up to six workers. After six, no additional output is produced even with the addition of the extra labor. Draw the total product of labor, average product of labor, and marginal product of labor curves. 4. (40 pts.) A cost minimizing firm uses capital and labor to produce screwdrivers (there are no other costs). Cost and production technology of this firm is given in the isocost/isoquant diagram below.other costs)....
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This note was uploaded on 05/03/2008 for the course ECON 211 taught by Professor Na during the Spring '08 term at Rice.
- Spring '08