1.Output is produced according to Q = 4 L + 6 K , where L is the quantity of lab
ID: 1226710 • Letter: 1
Question
1.Output is produced according to Q = 4L + 6K, where L is the quantity of labor input and K is the quantity of capital input. If the price of K is $12 and the price of L is $6, then the cost minimizing combination of K and L capable of producing 60 units of output is:
L = 7.5 and K = 5
L = 5 and K = 6.66
L = 6 and K = 6
L = 0 and K = 10
L = 15 and K = 0
2.Hedge Fun is a landscaping firm that specializes in topiary. Last year, the firm had 60 employees and served 120 customers. This year, it had 70 employees and served 140 customers. What is the marginal product of labor?
2
3
4
5
none of the above
3.
The marginal product of labor is defined by the:
output divided by the marginal product of labor
change in labor input usage divided by the change in output
change in output divided by the change in labor input usage
output divided by the labor input usage
e. labor input usage divided by the output level
4.
Whenever average product is declining with increases in input usage:
total product is declining with increases in input
marginal product is greater than average product
marginal product is less than average product
total product is increasing with increases in input
total product is at a maximum
a.L = 7.5 and K = 5
b.L = 5 and K = 6.66
c.L = 6 and K = 6
d.L = 0 and K = 10
e.L = 15 and K = 0
Explanation / Answer
1. Ans: L = 7.5 and K = 5
Explanation: Q = 4(7.5) + 6(5) = 60 (Because for production both labor and capital is required)
2. Ans: 2
Explanation: (140 - 120) / (70 - 60) = 2. (marginal product of labor is the change in output due to change in labor)
3. Ans: change in output divided by the change in labor input usage
4. Ans: marginal product is less than average product
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