Business, 25.03.2021 17:30, austinparness02
Davy Metal Company produces brass fittings. Davy’s engineers estimate the production function represented below as relevant for their long-run capital-labor decisions.
Q = 500L0.6K0.8
where Q = annual output measured in pounds,
L = labor measured in person hours,
K = capital measured in machine hours.
The marginal products of labor and capital are:
MPL = 300L^-0.4K0.8 MPK = 400L0.6K^-0.2
Davy's employees are relatively highly skilled and earn $15 per hour. The firm estimates a rental charge of $50 per hour on capital. Davy forecasts annual costs of $500,000 per year, measured in real dollars.
a. Determine the firm's optimal capital-labor ratio, given the information above.
b. How much capital and labor should the firm employ, given the $500,000 budget? Calculate the firm's output.
c. Davy is currently negotiating with his workers. The firm's personnel manager indicates that the wage may rise to $22.50 under the proposed contract. Analyze the effect of the higher wage on the optimal capital-labor ratio and the firm's employment of capital and labor. What will happen to the firm's output?
Answers: 3
Other questions on the subject: Business
Business, 22.06.2019 16:10, safiyyahrahman6907
From what part of income should someone take savings?
Answers: 2
Business, 22.06.2019 16:20, ashleyprescot05
Stosch company's balance sheet reported assets of $112,000, liabilities of $29,000 and common stock of $26,000 as of december 31, year 1. if retained earnings on the balance sheet as of december 31, year 2, amount to $74,000 and stosch paid a $28,000 dividend during year 2, then the amount of net income for year 2 was which of the following? a)$23,000 b) $35,000 c) $12,000 d)$42,000
Answers: 1
Business, 22.06.2019 19:30, darkremnant14
Problem page a medical equipment industry manufactures x-ray machines. the unit cost c (the cost in dollars to make each x-ray machine) depends on the number of machines made. if x machines are made, then the unit cost is given by the function =cx+−0.3x2126x31,935 . how many machines must be made to minimize the unit cost?
Answers: 3
Do you know the correct answer?
Davy Metal Company produces brass fittings. Davy’s engineers estimate the production function repres...
Questions in other subjects:
Social Studies, 19.08.2019 16:10
Chemistry, 19.08.2019 16:10
Mathematics, 19.08.2019 16:10
