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She also reports that the MRTSLK in Rice county is higher than the MRTSLK in neighboring Reno county. Are you minimizing your costs? Explain.
what will the firm's marginal rate of technical substitution be? What is the maximum number of iPods it can produce?
Baldor, Inc. measures the marginal rate of technical substitution (MRTS) at MPL/MPK = 3. What can Baldor do to improve its situation?
Does your answer to (a) change if Gloucester originally only uses 17 ATMs? 30 ATMs? What do production isoquants look like for Gloucester Old Bank?
What ratio of capital to labor minimizes Jake and Paul's total costs? How much will hiring these inputs cost them?
What is the vertical intercept of the line you drew? The horizontal intercept? What does each represent?
Do both labor and capital display diminishing marginal products? Does the isoquant you drew in (a) display a diminishing marginal rate of technical substitution
As K increases, what happens to the marginal product of labor? What happens to the marginal product of capital as K increases? As L increases?
How much would consumer surplus change if the rising cost of fuel led airlines to raise the price from $150 to $200?
How does a tax affect consumer and producer surplus? Why does a tax create a deadweight loss? How does a subsidy affect consumer and producer surplus?
Why is the relative size of crowding out inefficiencies dependent only on the elasticity of demand and not on the elasticity of supply?
What is a deadweight loss? If the price elasticity of a good is large, would you expect the deadweight loss to be large or small?
How does a demand shift affect consumer and producer surplus in a given market? Consider both inward and outward shifts of the demand curve.
Define consumer and producer surplus. What is the demand choke price? How does this price relate to consumer surplus?
What sign might you expect the income elasticity to have if the good in question is Swedish massages?
What sign might you expect the cross-price elasticity to have if the two goods are shampoo and hair conditioner? Why?
If the price elasticity of demand for sales is -?2.66, how much should Sal lower his price in order to meet his goal?
How does the elasticity of demand for illegal drugs relate to efficacy of this policy? Are you more willing to favor policy if you are told demand is inelastic?
How does your answer depend on the price elasticity of demand for lettuce? Explain, using two graphs to illustrate your point.
At the point of tangency, what is true about the ratio of the goods' marginal utilities and the ratio of their prices?
What is a budget constraint? What determines the slope of a budget constraint? What situation would change the slope of a budget constraint?
When are two goods perfect complements? What does the indifference curve look like?
When are two goods perfect substitutes? What does the indifference curve look like, or what is its curvature?
Why does the slope of the indifference curve vary along the curve? What does this variability tell us about consumers' preferences?
What does term utility mean? How does utility relate to a utility function? Define indifference curve. What does an indifference curve tell us about consumer?