Quiz7_F10 - b. (2) How much labor will they need to hire in...

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3550 F10 Quiz 7 Last Name: First Name: 1. Assume a firm is operating on its expansion path in the short run: Q = 6 1/2 *L 1/2 *K 1/2 Where: K is fixed at 10, L = 15, Q = 30, MRTS = 2/3, P L = $40, P K =$60 a. (3) Graph their production isoquant and isocost curves, label all relevant part of the graph. Now assume that because of an increase in the price of the good in the market, they decide to increase production in the short run to 42.426
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Unformatted text preview: b. (2) How much labor will they need to hire in the short run to produce Q = 42.426? c. (3) Will the firm want to change its input mix in the long run? Explain how you know. d. (2) Describe the difference in marginal cost between the short run and long run. That is, explain which is higher, and why....
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