A manager hires labor and rents capital equipment in a very competitive market. Currently the wage rate is $12 per hour and capi
1 answer:
Answer:
The firm should decrease the amount of capital used.
Explanation:
The wage rate is $12 per hour and capital is rented at $8 per hour.
The marginal product of labor is 60 units of output per hour and the marginal product of capital is 45 units of output per hour.
A manager hires labor and rents capital equipment in a very competitive market.
The ratio of marginal product of labor and wage rate
=
= 5
The ratio of marginal product of capital and rent
=
= 5.625
Since the ratio is greater for capital, it means that the manager should decrease the amount of capital used in the production process.
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Answer:
Option c) how a consumer might trade off different levels of consumption of each of two goods, while staying at the same utility level.
Explanation:
This is the very definition of an indifference curve. The points in an indifference curve are the combinations of the quantities (level of consumption) of two different goods which will produce the very same utility to the consumer. The consumer will perceive any of those combinations as having the same utility for him.
For example, a usual graph of various indifference curves will look like the graph attached.
In this graph the combination of 2 pairs of shoes and 15 pants will be perceived as having the same utility as the combination of 5 pairs of shoes and 4 pants. Both are combinations in the same indifference curve, the green one, and the utility of any combination lying in that green curve will be rated the same: u = 1.
