"econ41502-23

"econ41502-23 - Long Run Production and Cost In...

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

View Full Document Right Arrow Icon
Economics 415 Spring 2010 Combinations of capital (K) and labor (L) Acme, Inc. may employ to produce 1000 units of output are shown in the isoquant below. The rental rate of capital is r = $1000 per unit and the wage paid to labor is $500 per unit. We would expect Acme, Inc to employ _________ units of labor and _______ units of capital to produce 1000 units of output. It’s per unit cost of production will _______dollars. Suppose the wage Acme must pay to attract and retain quality labor rises from $500 to $2000 per unit. At its current levels of capital and labor employment, the cost per unit of producing 1000 units of output will rise to ________. Given enough time to adjust its levels of capital and labor employment (in the long run), Acme will employ ________units of labor and ______ units of capital to produce 1000 units of output. Its per unit cost of production will be ________ dollars. Labor
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

"econ41502-23 - Long Run Production and Cost In...

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