With increase in wage rate (w), what happens to optimal amount of labor (L) that maximizes profit in the short run? Increases Decreases first and then increases Decreas

Assignment Task

1. With increase in wage rate (w), what happens to optimal amount of labor (L) that maximizes profit in the short run?

Increases
Decreases first and then increases
Decreases
Remains constant

2. Match the following pairs correctly.

Monopsony
Many buyers, many sellers
Monopol
One buyer, many sellers
Perfect Competition
Many buyers, a few large sellers
Oligopoly
Many buyers, one seller

3) Comprehension: A firm with the production function f(x1,2) = min(x1,272), where is the amount of input 1 and is 1 point the amount of input 2 that the firm uses in its production. Notice that the firm uses the inputs in fixed proportions, hence the given type of production function. What returns to scale does this production function exhibit

Increasing
Decreasing
Can’t say with the given information set
Constant

4. If the firm faces input prices as (w1, w2), what is the cheapest way to produce 10 units of final good using the inputs as per 1 point the production function?

Lowry +Surg
min(w1, 2w2)
min[(1/2)w1, w2]
2w1+ w

5. What will be the minimum cost of producing the final good, y, if the firm is faced by input prices (w1, w2)?

(101+103/2)y
min(w, w/2). y
wy+way
max(wi, w). y

6. Given a well-behaved production function q = f(K, L), with diminishing marginal productivities of labour (L) and capital (K), i.e., fkk and fLL are negative; what we could conclude about MRTS (Marginal Rate of Technical Substitution)?

MRTS is always positive
MRTS is either zero or positive
MRTS is always negative
There is conclusion that we can draw about MRTS with given information

7. Suppose production function of a firm using 1 and 22 as the two inputs is f(1,2)=√1+2 What is the supply function for this firm if input price for z is greater than input price for 22. Assume price for final good ‘q’ as numeraire

(p-1).9-1/(41)
q=1/(4√√(w+w2))
9-1/(w+w2)
9-1/(22)

8. What will be the profit function for the firm?

(p, w)=1/(4w2)
(p, w)=1/(2w1)
(p, w) = 1/(4√√(w1+w2))
(p, w)=1/(4w2+2w2)

9. Price and costs (dollars)

In the above figure, the firm’s initial average total cost curve is SRAC with an initial marginal cost curve of SRMC. The price of the product is P1. In the short run the firm will produce output equal to the amount:

10. When the firm has reached its long-run equilibrium position, it will produce output equal to the amount:

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