300hw2answer - As long as the marginal cost of producing...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Homework 2 Answer Key 6.9 a. q = 100 KL  = 1,000 so KL  = 10, or, K L = 100. b K = 10, L = 10 AP L = q/L = 1,000/10 = 100 boxes per hour per worker. c If q = 200 KL  = 1000 KL  = 5, or, KL = 25. Isoquant shifts to q' 0 . Now, if K = 10 L = 2.5 AP L = q/L = 1,000/2.5 = 400 boxes per hour per worker. 7.5 a. q = 2 K L × K = 100, q = 2 100 . L × q = 20 . L 2 2 20 400 100 100 q q L so L q STC vK wL = = = + = + b. 50 25, 106.25, 4.25 0.5 50, 125, 2.5, 1 100, 200, 2, 2 200, 500, 2.5, 4 q SMC If q STC SAC SMC If q STC SAC SMC If q STC SAC SMC If q STC SAC SMC = = = = = = = = = = = = = = = = =
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
c. d. The curves intersect at q = 100.
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: As long as the marginal cost of producing one more unit is below the average cost curve, average costs will be falling. Similarly, if the marginal cost of producing one more unit is higher than the average cost, then average costs will be rising. Therefore, the SMC curve must intersect the SAC curve at its lowest point....
View Full Document

Page1 / 2

300hw2answer - As long as the marginal cost of producing...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online