Suppose the Inputs and Outputs for Carbon Credits Are Shown

question 45

Essay

Suppose the inputs and outputs for Carbon Credits are shown below. $$\begin{array} { c c c c c } \hline { \quad\quad\quad\quad\quad\text { Inputs } } \\\hline \text { Output } & \text { Capital } & \text { Labour } & \text { Total Cost } & \text { LRAC } \\100 & 1 & 4 & & \\200 & 2 & 7 & \\300 & 3 & 10 & & \\400 & 4 & 14 & & \\500 & 5 & 19 & \\600 & 6 & 25 & & \\\hline\end{array}$$ a) If capital cost $40 per unit and labour costs $12 per unit fill in the blanks in the table above.
b) At what output do increasing returns come to an end?
c) What is the shape of the LRAC curve?
d) Graphically, what would happen to the LRAC curve if the cost of capital dropped to $30 per unit?

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Definitions:

Sneezing

An involuntary burst of air through the nose and mouth, usually caused by irritation of the nasal mucosa.

Temper Tantrum

An emotional outburst, typically characterized by stubbornness, crying, screaming, defiance, or anger, mostly observed in children.

Raising Your Hand

A common gesture used to signal a desire to speak or ask a question, often in educational settings.

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired; a response that is at first elicited by the second stimulus is eventually elicited by the first stimulus alone.