Q1. Labor costs $12 per hour. Nine workers produce 180 bushels of product per hour, whereas 10 workers produce 196 bushels. Land rents for $1,200 per acre every year. With 10 acres worked by 9 employees marginal physical product of an acre of land is 1400 bushels every year. Does the farmer minimize costs by hiring nine workers and renting 10 acres of land? If not, which input should he use in larger relative quantity?
Q2. If there is a 10% decline in the cost of women's fur coats and a 25% increase in quantity demanded Illustrate what is the elasticity?