To Answer the Questions, Use the Following Figure That

question 16

Short Answer

To answer the questions, use the following figure that shows a firm's isoquant for producing 3,000 units of output and four isocost curves. Labor and capital each cost $100 per unit.

-Answer the following:
a. At point A, the MRTS is ____________ (less than, greater than, equal to) the input price ratio, w/r. The total cost of producing 3,000 units of output with input combination A is $____________.
b. By moving from A to B, the firm _______________ (increases, decreases) labor usage and _______________ (increases, decreases) capital usage. At point B the MRTS is _______________ (greater than, less than, equal to) the input price ratio, w/r. The movement from A to B _______________ (increased, decreased) total cost by $_________.
c. At point C the firm __________________ the cost of producing 3,000 units of output. The MRTS is _______________ (greater than, less than, equal to) the input price ratio, w/r.
d. The optimal input combination is _________ units of labor and _________ units of capital. At this combination, total cost of producing 3,000 units is $____________.

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Definitions:

Goal Conflict

A situation where two or more goals are in opposition, making it difficult to achieve one without compromising the other.

Budget Slack

The intentional underestimation of revenues or overestimation of expenses within a budget to create a cushion for unexpected situations.

Employee Self-interests

Employee self-interests are the motivations and personal goals that drive the behaviour of individuals within an organization, which may or may not align with the company's objectives.

Cash Receipts

The collection of cash, typically by a business from its customers, for goods or services provided.