Price of capital have on the firms demand for labor
Course:- Microeconomics
Reference No.:- EM13700098

Assignment Help
Assignment Help >> Microeconomics

Consider a market in long-run equilibrium, where the firm’s mix of inputs is the cost-minimizing mix of inputs. a. Use a graph that includes isocosts and isoquants to illustrate cost minimization for a firm producing q units of output. b. Verbally explain the conditions that must be present for a firm to minimize its cost of producing a certain quantity of output. c. Holding output constant, illustrate and explain the effect a decrease in the price of capital has on the cost-minimizing mix of inputs. d. What effect, if any, does the decrease in the price of capital have on the firm’s marginal cost of production? Explain. e. Does a change in the price of capital affect the firm’s profit-maximizing output? Explain. f. What effect does a reduction in the price of capital have on the firm’s demand for labor? Use the analysis from above to explain your answer

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Microeconomics) Materials
$3500 is deposited every year with 6% interest each year. 38 equal deposits are made. How much money can be withdrawn in 20 equal payments,beginning one year after the last de
Your company is trying to decide whether to raise the price of your product from $$7.5 by $0.50 or lower it by $0.50. Given the above information what would you recommend if t
Other things being equal, what will happen to automaker's profits if they are able to sell more vehicles using battery packs and thereby scale up battery production? Why do yo
To take advantage of high prices for snow shovels during a very snowy winter, Alexander Shovels, Inc., decides to increase output and the success of Red Bull leads more firm
The firm is considering a quantity discount. The first 400 units can be purchased at a price of $120, and further units can be purchased at a price of $80. How many units will
MPL=100 MPK=500 PL=50 PK=10. Is the firm minimizing costs? If not, how should the firm adjust its input set? What is the willingness condition for cost minimization? What
When a household buys a new house, does that represent consumption, saving, or investment? What factors may influence a household when deciding between buying stocks, bon
Soft drink advertising. (5%) The soft drink producer may use TV advertising for stimulation of sales. The cost of advertising is 20 000 euro per 30 seconds commercial, but aft