Assignment 1:ECO 202 Assignment 1: Questions & Answers: Updated A+ Score Solution

ECO 202 Assignment 1: Questions & Answers: Updated
A+ Score Solution


Fill in the blanks
1. A firm minimizes cost when __________ per dollar spent on
labour equals __________ per dollar spent on capital.
2. The mathematical condition for cost minimization is

MPL/PL= ……/……

3. The slope of an isoquant is called the __________ and equals
__________.
4. The slope of an isocost line equals __________.
5. At the optimal input bundle, the isoquant and isocost are
__________.
6. If MPL/PL > MPK/PK , the firm should use __________ labour and
__________ capital.
7. When the price of labour rises, the firm substitutes __________
for labour.
8. Isoquants are convex to the origin because of __________ MRTS.
9. When inputs are perfect substitutes, isoquants are __________
lines.
10.When inputs are perfect complements, isoquants are __________
shaped.
11.If both input prices double, the slope of the isocost line
__________.
12.If both input prices double, the optimal input mix __________.
13.If MRTS>PL/PK , the firm should use more __________.

, 14.The condition MPK/MPL=PK/PL shows how marginal products
adjust to __________.
15.If labour becomes relatively cheaper, the firm moves along the
isoquant toward more __________ and less __________.
16.If a firm is not at tangency, it can reduce __________ without
changing __________.
17.The MRTS measures how much __________ can be reduced when
__________ increases while keeping output constant.
18.A technological improvement that increases MPL only will cause
the firm to use __________ labour.
19.If MPL decreases while PL stays constant, the firm should use
__________ labour.
20.Cost minimization occurs at the point where the isoquant is
tangent to the __________ line.