2. The Longheel Press produces memo pads in its local shop. The company can rent its equipment and hire workers at competitive rates. Equipment needed for this operation can be rented at $52 per hour, and labor can be hired at $12 per worker hour. The company has allocated $150,000 for the initial run of memo pads. The production function using available technology can be expressed as: Q=0.25K 0.25 0.75 where Q is memo pads (boxes per hour), K is capital input (units per hour), and L is labor input (units of worker time per hour). The marginal products of labor and capital are as follows: MPL = (0.75)(0.25)K 0.25-0.25 a. Construct the isocost equation. and MPK = (0.25)(0.25)K-0.750.75 b. Determine the appropriate input mix to get the greatest output for an outlay of $150,000 for a production run of memo pads. Also, compute output. c. Explain what would happen in the short-run (keeping capital fixed) to the appropriate input mix if production were changed to 1,500 units per hour. Would the input combination be different in the long-run? If so, how would it change? Explain.

2. The Longheel Press produces memo pads in its local shop. The company can rent its equipment and hire workers at competitive rates. Equipment needed for this operation can be rented at $52 per hour, and labor can be hired at $12 per worker hour. The company has allocated $150,000 for the initial run of memo pads. The production function using available technology can be expressed as: Q=0.25K 0.25 0.75 where Q is memo pads (boxes per hour), K is capital input (units per hour), and L is labor input (units of worker time per hour). The marginal products of labor and capital are as follows: MPL = (0.75)(0.25)K 0.25-0.25 a. Construct the isocost equation. and MPK = (0.25)(0.25)K-0.750.75 b. Determine the appropriate input mix to get the greatest output for an outlay of $150,000 for a production run of memo pads. Also, compute output. c. Explain what would happen in the short-run (keeping capital fixed) to the appropriate input mix if production were changed to 1,500 units per hour. Would the input combination be different in the long-run? If so, how would it change? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Craig and Javad run a paper company. Each week they need to produce 1,000 reams of paper to ship to their customers. The paper plant's longrun production function is Q = 4KL, where Q is the number of reams produced, K is the quantity of capital rented, and L is the quantity of labor hired. The weekly cost function for the paper plant is C = 20K + 4L, where C is the total weekly cost. (a) What ratio of capital to labor minimizes Craig and Javad's total costs? (b) How much capital and labor will Craig and Javad need to rent and hire in order to produce 1,000 reams of paper each week? (c) How much will hiring these inputs cost them?
A firm estimates its production function as Q = -2.4 + 20*L -.5*L2 + 30*K -1.00*K2 + 15*F -.3*F2. Total cost is TC = $2*L + $2.5*K + $1.75*F. The firm wishes to produce 400 units of output. Use Excel to find the cost minimizing amounts of L, K and F. How much F (Fuel) should the firm use?
Suppose you run a factory whose short-run production function is given by f (L) = 180L² – 3L³. (a) Find mathematical expressions for the total product of labor, the average product of labor and the marginal product of labor. (b) On two separate axes, graph TPL, APL, and M PL. The diagrams do not need to be scale, but be sure they are internally consistent. In other words, make sure that all relevant relationships between the three lines are correct. If you have trouble figuring out what the graph looks like, feel free to use a graphing calculator or an online graphing tool to find the basic shape. Find the quantity of labor associated with each of the following points and label it on your diagram: (i) the maximum value of TPL, (ii) the maximum value of APL, (iii) the maximum value of MPL. (c) For what values of L does the production function exhibit each of the following: i. increasing marginal labor productivity ii. diminishing marginal labor productivity iii. negative marginal labor…
Consider the following cost function: 3 C=0.2q³-6q² + 80q + 150. (Enter a numeric response using a real number rounded to two decimal places.) When output is 19 units, average cost is $ When output is 19 units, marginal cost is $ The output level where average variable cost equals marginal cost is units.
Consider a small photography studio with 5 workers and 2 printers. The total cost of labor and capital is $3,200. In order to reduce total operating costs, the owner leases 2 additional printers and fires 3 workers. After these changes, the salary of each worker increases by $15, the cost of using each of the printers (both new and old) remains constant, and the total cost of labor and capital decreases to $2,900. What is the cost of using one printer?
Let F be the fixed cost of production, let VC be the variable cost of production, C be the total cost, MC be the marginal cost, AFC, the average fixed cost, AVC, the average variable cost, and AC, the average cost. Complete the following cost table. (Enter numeric responses rounded to two decimal places.) Output (q) 1 2 3 4 5 6 7 8 9 10 F $250 250 250 250 250 250 250 250 250 с MC AFC AVC AC $266 $16 $250.00 $16.00 $266.00 12 125.00 14.00 139.00 8 83.33 12.00 4 62.50 10.00 72.50 298 50.00 59.60 8 310 12 41.67 10.00 51.67 76 326 35.71 10.86 46.57 96 346 20 12.00 43.25 41.11 27.78 13.33 120 370 24 148 28 25.00 14.80 VC $16 28 278 36 286 40 48
suppose a company has two production facilities with two different TC functions. in facility A total costs are given by $600,000+0.4Q^2 in facility B total costs are given by $300,000+0.5Q^2 The firm needs to produce 900 units how many units should they produce in facilities a and b to minimize total costs
Yummy Gummies, Inc. makes boxes of individually packaged gummies. The company has a cost function given by C(x) dollars when x boxes of Yummy Gummies are made. If C '(100) = $3.50 per box, which of the following can we conclude from this information? %3D O The approximate cost of making the 100" box of Yummy Gummies is $3.50. O The exact cost of making the 99h box of Yummy Gummies is $3.50. The approximate cost of making the 101“ box of Yummy Gummies is $3.50. O The approximate cost of making the 99 box of Yummy Gummies is $3.50. O The exact cost of making the 101st box of Yummy Gummies is $3.50.
Jaskier can only produce output in integer units. His Fixed cost is $200 and his Total Cost of production for every quantity is given in the table below. What is his minimum Average Variable Cost? Q TC 1 322.31 2 344.24 3 380.79 4 406.53 5 511.2 6 578.16 7 800 8 782.84 9 907.11 10 1046
Assume that it costs a company approximately C(x) = 400,000 + 180x + 0.001x² dollars to manufacture x smartphones in an hour. (a) Find the marginal cost function. Use it to estimate how fast the cost is increasing when x = 10,000. $ per smartphone Compare this with the exact cost of producing the 10,001st smartphone. The cost is increasing at a rate of $ per smartphone. The exact cost of producing the 10,001st smartphone is $ Thus, there is a difference of $ (b) Find the average cost function C and the average cost to produce the first 10,000 smartphones. C(x) C(10,000) $ (c) Using your answers to parts (a) and (b), determine whether the average cost is rising or falling at a production level of 10,000 smartphones. The marginal cost from (a) is ---Select--- O than the average cost from (b). This means that the average cost is ---Select--- O at a production level of 10,000 smartphones.