Posted by **Ed** on Tuesday, July 3, 2007 at 11:58pm.

The chapter is on Production and costs in thelong run, we are given a long run expansion path graph, all through out the book we are given labor cost and capital cost, ie. price of labor $5 dollars per unit(w), price of capital $10 per unit (r). Then I get the following question:

The production engineers at Impact Industries have derived an expansion path (graph shown but I can't re-produce) the price of labor per unit is $100 per unit. The question is what price does Impact Industries pay for capital?

I'm lost because we've always been given the per unit of capital....am I going about this wrong? How do I find the capital price?!?!?!?!?

Output Labor Capital (K) (w = $5) (r=???)

120 4 20

180 6 30

240 8 50

Thanks,

EY

I don't believe you have provided enough information to solve. I suspect, perhaps, you are missing values for the marginal product of labor and the marginal product of capital?

## Answer This Question

## Related Questions

- Economics - There is a graph showing the expansion path and three curves at 120...
- Expansion Path Economics - I've been trying to find a solution to this without ...
- Economics - The production engineers at Impact industries have derived the ...
- Economics - 2. (i) The production function for a firm is given by Q = LK where Q...
- economics - suppose a firm's constant-returns to scale production function ...
- Economics - the price of labor is $100 per unit and the price of capital is $20 ...
- Managerial Economics - I've been trying to find a solution to this without much ...
- economics - suppose a competitive market consists of identical firms with a ...
- Economics - Consider the production function Q = 20K 1/2 L 1/2. The firm ...
- Business Economics - When we are given an expression for the Short Run Total ...

More Related Questions