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Teacher Isoquant and Cost Minimization Consider a teacher isoquant, which shows different input combinations that produce a target quantity of output. Suppose the inputs for teacher productivity are graduate course work (on the horizontal axis, ranging from 0 to 10 years) and verbal ability (on the vertical axis, measured as the teacher’s SAT verbal score). Under the typical pay structure, an additional year of graduate course work increases teacher pay by about $4,000. Suppose that a one-unit increase in verbal ability increases teacher pay by $500. a. Use the empirical evidence cited in the book to draw an education isoquant. The marginal rate of technical substitution between graduate education and verbal ability is _____ SAT points per year of graduate coursework. b. Suppose the MRTS is small, but positive, with a value of 2 SAT points per year of graduate course work. Draw an isoquant and identify the cost-minimizing combination of verbal ability and graduate course work. To minimize the cost of a given output level, a school district should hire teachers with _____ years of graduate course work.
Chapter 8, Problem 7(choose chapter or problem)
Teacher Isoquant and Cost Minimization
Consider a teacher isoquant, which shows different input combinations that produce a target quantity of output. Suppose the inputs for teacher productivity are graduate course work (on the horizontal axis, ranging from 0 to 10 years) and verbal ability (on the vertical axis, measured as the teacher’s SAT verbal score). Under the typical pay structure, an additional year of graduate course work increases teacher pay by about $4,000. Suppose that a one-unit increase in verbal ability increases teacher pay by $500.
a. Use the empirical evidence cited in the book to draw an education isoquant. The marginal rate of technical substitution between graduate education and verbal ability is _____ SAT points per year of graduate coursework.
b. Suppose the MRTS is small, but positive, with a value of 2 SAT points per year of graduate course work. Draw an isoquant and identify the cost-minimizing combination of verbal ability and graduate course work. To minimize the cost of a given output level, a school district should hire teachers with _____ years of graduate course work.
Questions & Answers
QUESTION:
Teacher Isoquant and Cost Minimization
Consider a teacher isoquant, which shows different input combinations that produce a target quantity of output. Suppose the inputs for teacher productivity are graduate course work (on the horizontal axis, ranging from 0 to 10 years) and verbal ability (on the vertical axis, measured as the teacher’s SAT verbal score). Under the typical pay structure, an additional year of graduate course work increases teacher pay by about $4,000. Suppose that a one-unit increase in verbal ability increases teacher pay by $500.
a. Use the empirical evidence cited in the book to draw an education isoquant. The marginal rate of technical substitution between graduate education and verbal ability is _____ SAT points per year of graduate coursework.
b. Suppose the MRTS is small, but positive, with a value of 2 SAT points per year of graduate course work. Draw an isoquant and identify the cost-minimizing combination of verbal ability and graduate course work. To minimize the cost of a given output level, a school district should hire teachers with _____ years of graduate course work.
ANSWER:Step 1 of 3
Given data:
Consider a teacher isoquant, which shows different input combinations that produce a target quantity of output. Suppose the inputs for teacher productivity are graduate coursework (on the horizontal axis, ranging from 0 to 10 years) and verbal ability (on the vertical axis, measured as the teacher's SAT verbal score).
Under the typical pay structure, an additional year of graduate coursework increases teacher pay by about $4,000. Suppose a one-unit increase in verbal ability increases teacher pay by $500.