Author Question: Julia is offered two options of government subsidies: 100 food stamp or 100 cash. If she receives ... (Read 82 times)

humphriesbr@me.com

  • Hero Member
  • *****
  • Posts: 550
Julia is offered two options of government subsidies: 100 food stamp or 100 cash. If she receives 100 cash, she will spend 80 on food.
 
  If equivalent evaluation is measured for the situation when only 100 is available to her, the equivalent evaluation is A) greater than 100.
  B) equal to 100.
  C) less than 100.
  D) Not enough information.

Question 2

Suppose the production function is q = 12 L0.25 K0.75. Determine the long-run capital-to-labor ratio (K/L) if the cost a unit of capital (r) is three times the cost of a unit of labor (w).
 
  What will be an ideal response?



mirabriestensky

  • Sr. Member
  • ****
  • Posts: 325
Answer to Question 1

C

Answer to Question 2

The firm minimizes costs by setting MRTS = w/r. MRTS = MPL/MPK = K/3L = 1/3 = w/r. This firm will set K/L equal to one.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Barbituric acid, the base material of barbiturates, was first synthesized in 1863 by Adolph von Bayer. His company later went on to synthesize aspirin for the first time, and Bayer aspirin is still a popular brand today.

Did you know?

A seasonal flu vaccine is the best way to reduce the chances you will get seasonal influenza and spread it to others.

Did you know?

In most climates, 8 to 10 glasses of water per day is recommended for adults. The best indicator for adequate fluid intake is frequent, clear urination.

Did you know?

Congestive heart failure is a serious disorder that carries a reduced life expectancy. Heart failure is usually a chronic illness, and it may worsen with infection or other physical stressors.

Did you know?

In the ancient and medieval periods, dysentery killed about ? of all babies before they reach 12 months of age. The disease was transferred through contaminated drinking water, because there was no way to adequately dispose of sewage, which contaminated the water.

For a complete list of videos, visit our video library