平狄克和鲁宾费尔德微观经济学microeconomics-rubinfeld-pindyck--te

Chapter7:TheCostsofProduction84CHAPTER7THECOSTOFPRODUCTIONQUESTIONSFORREVIEW1.Afirmpaysitsaccountantanannualretainerof$10,000.Isthisaneconomiccost?Explicitcostsareactualoutlays.Theyincludeallcoststhatinvolveamonetarytransaction.Animplicitcostisaneconomiccostthatdoesnotnecessarilyinvolveamonetarytransaction,butstillinvolvestheuseofresources.Whenafirmpaysanannualretainerof$10,000,thereisamonetarytransaction.Theaccountanttradeshisorhertimeinreturnformoney.Therefore,anannualretainerisanexplicitcost.2.Theownerofasmallretailstoredoesherownaccountingwork.Howwouldyoumeasuretheopportunitycostofherwork?Opportunitycostsaremeasuredbycomparingtheuseofaresourcewithitsalternativeuses.Theopportunitycostofdoingaccountingworkisthetimenotspentinotherways,i.e.,timesuchasrunningasmallbusinessorparticipatinginleisureactivity.Theeconomic,oropportunity,costofdoingaccountingworkismeasuredbycomputingthemonetaryamountthattheowner’stimewouldbeworthinitsnextbestuse.3.Pleaseexplainwhetherthefollowingstatementsaretrueorfalse.a.Iftheownerofabusinesspayshimselfnosalary,thentheaccountingcostiszero,buttheeconomiccostispositive.True.Sincethereisnomonetarytransaction,thereisnoaccounting,orexplicit,cost.However,sincetheownerofthebusinesscouldbeemployedelsewhere,thereisaneconomiccost.Theeconomiccostispositive,reflectingtheopportunitycostoftheowner’stime.Theeconomiccostisthevalueofthenextbestalternative,ortheamountthattheownerwouldearnifhetookthenextbestjob.b.Afirmthathaspositiveaccountingprofitdoesnotnecessarilyhavepositiveeconomicprofit.True.Accountingprofitconsidersonlytheexplicit,monetarycosts.Sincetheremaybesomeopportunitycoststhatwerenotfullyrealizedasexplicitmonetarycosts,itispossiblethatwhentheopportunitycostsareaddedin,economicprofitwillbecomenegative.Thisindicatesthatthefirm’sresourcesarenotbeingputtotheirbestuse.c.Ifafirmhiresacurrentlyunemployedworker,theopportunitycostofutilizingtheworker’sservicesiszero.False.Theopportunitycostmeasuresthevalueoftheworker’stime,whichisunlikelytobezero.Thoughtheworkerwastemporarilyunemployed,theworkerstillpossessesskills,whichhaveavalueandmaketheopportunitycostofhiringtheworkergreaterthanzero.Inaddition,sinceopportunitycostistheequivalentoftheworker’snextbestoption,itispossiblethattheworkermighthavebeenabletogetabetterjobthatutilizeshisskillsmoreefficiently.Alternatively,theworkercouldhavebeendoingunpaidwork,suchascareofachildorelderlypersonathome,whichwouldhavehadavaluetothosereceivingtheservice.4.Supposethatlaboristheonlyvariableinputtotheproductionprocess.Ifthemarginalcostofproductionisdiminishingasmoreunitsofoutputareproduced,whatcanyousayaboutthemarginalproductoflabor?Themarginalproductoflabormustbeincreasing.Themarginalcostofproductionmeasurestheextracostofproducingonemoreunitofoutput.Ifthiscostisdiminishing,thenitmustbetakingfewerunitsoflabortoproducetheextraunitofoutput,sincetheextracostreferstotheextracostofthelabor.Iffewerunitsoflaborarerequiredtoproduceaunitofoutput,thenthemarginalproduct(extraoutputChapter7:TheCostsofProduction85producedbyanextraunitoflabor)mustbeincreasing.Notealso,thatMC=w/MPL,sothatifMCisdiminishingthenMPLmustbeincreasingforanygivenw.5.Supposeachairmanufacturerfindsthatthemarginalrateoftechnicalsubstitutionofcapitalforlaborinhisproductionprocessissubstantiallygreaterthantheratiooftherentalrateonmachinerytothewagerateforassembly-linelabor.Howshouldhealterhisuseofcapitalandlabortominimizethecostofproduction?Tominimizecost,themanufacturershoulduseacombinationofcapitalandlaborsotherateatwhichhecantradecapitalforlaborinhisproductionprocessisthesameastherateatwhichhecantradecapitalforlaborinexternalmarkets.Themanufacturerwouldbebetteroffifheincreasedhisuseofcapitalanddecreasedhisuseoflabor,decreasingthemarginalrateoftechnicalsubstitution,MRTS.HeshouldcontinuethissubstitutionuntilhisMRTSequalstheratiooftherentalratetothewagerate.TheMRTSinthiscaseisequaltoMPK/MPL.AsthemanufacturerusesmoreKandlessL,theMPKwilldiminishandtheMPLwillincrease,bothofwhichwilldecreasetheMRTSuntilitisequaltotheratiooftheinputprices(rentalrateoncapitaldividedbywagerate).6.Whyareisocostlinesstraightlines?Theisocostlinerepresentsallpossiblecombinationsoflaborandcapitalthatmaybepurchasedforagiventotalcost.Theslopeoftheisocostlineistheratiooftheinputpricesoflaborandcapital.Ifinputpricesarefixed,thentheratioofthesepricesisclearlyfixedandtheisocostlineisstraight.Onlywhentheratioorfactorpriceschangeasthequantitiesofinputschangeistheisocostlinenotstraight.7.Assumethemarginalcostofproductionisincreasing.Canyoudeterminewhethertheaveragevariablecostisincreasingordecreasing?Explain.Marginalcostcanbeincreasingwhileaveragevariablecostiseitherincreasingordecreasing.Ifmarginalcostisless(greater)thanaveragevariablecost,theneachadditionalunitisaddingless(more)tototalcostthanpreviousunitsaddedtothetotalcost,whichimpliesthattheAVCdeclines(increases).Therefore,weneedtoknowwhethermarginalcostisgreaterthanaveragevariablecosttodeterminewhethertheAVCisincreasingordecreasing.8.Assumethemarginalcostofproductionisgreaterthantheaver