What is the least-cost combination of labour and capital the firm should employ in producing 80 units of output? Explain. b. What is the profit-maximizing combination of labour and capital the firm should use? Explain. What is the resulting level of output? What is the economic profit? Is this the least costly way of producing the profit-maximizing output?
5. KEY QUESTION In each of the following four cases, MRPt and MRPC refer to the marginal revenue products of labour and capital, respectively, and Pt and PC refer to their prices. Indicate in each case whether the conditions are consistent with maximum profits for the firm. If not, state which resource(s) should be used in larger amounts and which resource^) should be used in smaller amounts.
6. Florida citrus growers say that the recent crackdown on illegal immigration is increasing the market wage rates necessary to get their oranges picked. Some are turning to $100,000 to $300,000 mechanical harvesters known as "trunk, shake, and catch" pickers, which vigourously shake oranges from the trees. If widely adopted, what will be the effect on the demand for human orange pickers? What does that imply about the relative strengths of the substitution and output effects?
7. (The Last Word) Explai n the economics of the substitution of ATMs for human tellers. Some banks are beginning to assess transaction fees when customers use human tellers rather than ATMs. What are these banks trying to accomplish?
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