The slope of an isoquant tells us how much output increases

The slope of an isoquant tells us how much output increases when one input is increased. the rate of substitution between labor and capital at the margin while producing the same output level. the decrease in capital needed to keep cost constant when labor increases by one unit the decrease in capital necessary to keep marginal product of labor constant when labor increases by one unit. QUESTIONS 2p-10. At a price of SIS, producer surplus quals Suppose the market supply curve in a competitive market is given by is O 37.5. 25. 12.50 O 100 QUESTION 9 A competitive firm faces a horizontal demand curve, which implies that O price never changes the firm cannot affect price by any action it takes the output rate of the firm is indeterminate the firm makes zero profits. QUESTION 10 A firm should shut down if its revenue is Yery large

Solution

7) ans is B. The slope of isoquant is MrTs which is the number of labor sacrificed in order to gain additional capital such that output remains same.

9)B. Demand curve is horizontal means firm is price taker and cant change the market price because of very small share in market.

8)when price is $15 then Q=2(15)-10=20

And intercept of price axis=5 because Q=0 when P=5

Thus producer surplus=1/2*10*20=100