19. A moving company requires one van and two workers in one hour to do one task. If labour cost is $20/hour per worker and renting a van costs $40/hour. What is the total cost of cost- minimizing input combination if the company wishes to do 20 tasks? Depict the scale and substitution effects if the wage decreases to $15/hour if the total cost does not change.

19. A moving company requires one van and two workers in one hour to do one task. If labour cost is $20/hour per worker and renting a van costs $40/hour. What is the total cost of cost- minimizing input combination if the company wishes to do 20 tasks? Depict the scale and substitution effects if the wage decreases to $15/hour if the total cost does not change.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter4: Extent (how Much) Decisions

Section: Chapter Questions

Problem 3MC

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19. A moving company requires one van and two workers in one hour to do one task. If labour cost is $20/hour per worker and renting a van costs $40/hour. What is the total cost of cost- minimizing input combination if the company wishes to do 20 tasks? Depict the scale and substitution effects if the wage decreases to $15/hour if the total cost does not change.
Cost curves Egidio Binaccio designed an ancestry app that allows people to connect with long lost Italian relatives. Egidio notices the following relationship between the number of hours he schedules and the number of downloads (sales) he gets. Below is a production function, for Egidios current company set up. NUMBER of LABOUR DOWNLOADS HOURS B) 10 C) 20 30 40 50 60 70 80 90 100 110 120 130 140 6.50 11.00 14.50 17.50 20.50 23.75 27.50 32.00 37.50 44.50 53.50 65.00 79.50 97.50 TVC TC MC AVC Suppose the firm can hire all the labour it would ever want at the going wage of $8 per labour-hour. The firm's total fixed costs are $64 per day. A) ATC Fill in the table showing total variable cost (TVC), total cost (TC), average variable cost (AVC), average total cost (ATC), and marginal cost (MC). [Remember: Marginal cost should be entered midway between rows of output.] On a graph with DOWNLOADS (per day) on the horizontal axis, draw the three "per-unit" cost curves, AVC, ATC, and MC. [Note…
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8. Engineers sometimes rely on the "0.6 rule," which states that the increase in cost is given by the increase in capacity raised to the 0.6 power; that is, C, = C,(X,/X,)06 where C, and C, are the costs of two pieces of equipment, and X, and X, are their respective capacities. a. Does the 0.6 rule suggest economies of scale? b. Some experts have stated that in the chemical and metal industries, the 0.6 rule can be applied to entire plants rather than individual pieces of equipment. If so, will the long-run average cost curve in these industries tend to be negatively sloped? c. Can you think of a way to test whether this rule is correct?
The accompanying table shows the total daily output for a firm producing specialty cakes and operating with a fixed amount of capital. The cost of labour is $200 per unit per day and the fixed cost of the capital is $1500 per day. Click the icon to view the table. 24 28 8 12 16 20 Complete the last four columns of the table. Units of Labour Total Output (per day) (per day) 4 200 24 2450 28 2510 500 1200 1950 2330 2450 $ 1500 2510 $ 4800 $ 1500 $ 5600 TFC TVC $6300 $ 7100 TC MC $ 2.67 $ 1.14 $ 1.07 $ 2.11 $6.67 $ 13.33 AFC $7.5 $3 $ 1.25 $ 0.77 $ 0.64 $ 0.61 AVC $4 $3.2 $2 $ 1.64 $ 1.72 $ 1.96 ATC $ 11.5 $6.2 $ 3.25 $ 2.41 $ 2.36 $ 2.57 $ 2.23 $0.6 (Round your responses to the nearest cent.) b. Assuming that labour is only hired in increments of 4 units, what is this firm's capacity level of output? per day $ 2.83
Following are four graphs representing various cost behaviors. Costs sol Volume $0 11 Required 1 Required 2 Volume 50 Volume Complete this question by entering your answers in the tabs below. 1. Identify whether the cost behavior in each graph is mixed, step-wise, fixed, or variable. 2. Identify the graph (I, II, III, or IV) that best illustrates the cost behavior for each of the following Identify whether the cost behavior in each graph is mixed, step-wise, fixed, or variable. Graph I Graph II Graph III Graph IV $0 Required 2 > Volume