I am totally confused and have this eco-test tonight and I am having
trouble understanding these reveiw questions, please help.
1) A farmer produces bushels of wheat with two inputs, land and labor.
Labor costs $10 per hour. Nine workers produce 180 bushels of whent
per hour, while ten workers produce 196 bushels. Land rents for 1,000
per acre per year. With ten acres worked by ten workers, the marginal
product of an acre of land is 1,400 bushels per year.
a) does the farmer minimie costs by hiring ten workers and renting ten
acres of land? Why or why not?
B if not, wich input should the farmer us in larger relative quantity.
*** the only data I can find to help assist in this question is that
MPL/PL = MPk/Pk ..which would in turn give me ratios of 1.4 = 1.6,
however how does that enable me to answer that question. I read about
isoquants and all the supporting information, I am just lacking the
total understanding.
and
Suppose that a firm's cost per unit of labor is $100 per day and it's
cost per unit of capital is $400 per day.
If the firm is producing efficiently, what is the marginal rate of
technical substitutions between labor and capital.
What????????????????????
help please |