3. If the MPPL/ MPPK in the production of a good is less than w/r, why is the produce not in producer equilibrium? Explain how, with no change in budget
size for the firm and with the given factor price ratio, output of the firm can be increased.
5. Suppose that a firm has a budget of $30,000, that the wage rate is $10 per hour, and that the rental rate is about $100 per hour. I f the wage rate increases to $15 per hour and the rental rate of capital rises to $120 per hour, what happens to the producer budget or isocost line? What will happen to the equilibrium of level output because of this change in factor prices? What will happen to the relative usage of labor and capital because of the change in factor prices? Explain.
8. In Figure 13, as one moves from S
3. If the MPPL/ MPPK in the production of a good is less than w/r, why is the produce not in producer equilibrium? Explain how, with no change in budget
size for the firm and with the given factor price ratio, output of the firm can be increased.
5. Suppose that a firm has a budget of $30,000, that the wage rate is $10 per hour, and that the rental rate is about $100 per hour. I f the wage rate increases to $15 per hour and the rental rate of capital rises to $120 per hour, what happens to the producer budget or isocost line? What will happen to the equilibrium of level output because of this change in factor prices? What will happen to the relative usage of labor and capital because of the change in factor prices? Explain.
8. In Figure 13, as one moves from S
