3)) Ajax, Inc. assembles gadgets. It can make each gadget either by hand or with a special gadget-making machine. Each gadget can be assembled in 15 minutes by a worker or in 5 minutes by the machine. The firm can also assemble some of the gadgets by hand and some w machines. Both types of work are perfect substitutes, and they are the only inputs necessary to produce the gadgets. a) Write down the equation of the firm's production function for the firm. Let G be the number of gadgets assembled, M the number of hours the machines are used, and L the numb of hours of labor. b) It costs the firm $30 per hour to use the machine and $10 per hour to hire a worker. Tł firm wants to produce 120 gadgets. What is the cost-minimizing input quantities? Illustrate yo answer with a clearly labeled graph

3)) Ajax, Inc. assembles gadgets. It can make each gadget either by hand or with a special gadget-making machine. Each gadget can be assembled in 15 minutes by a worker or in 5 minutes by the machine. The firm can also assemble some of the gadgets by hand and some w machines. Both types of work are perfect substitutes, and they are the only inputs necessary to produce the gadgets. a) Write down the equation of the firm's production function for the firm. Let G be the number of gadgets assembled, M the number of hours the machines are used, and L the numb of hours of labor. b) It costs the firm $30 per hour to use the machine and $10 per hour to hire a worker. Tł firm wants to produce 120 gadgets. What is the cost-minimizing input quantities? Illustrate yo answer with a clearly labeled graph

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

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3)) Ajax, Inc. assembles gadgets. It can make each gadget either by hand or with a special
gadget-making machine. Each gadget can be assembled in 15 minutes by a worker or in 5
minutes by the machine. The firm can also assemble some of the gadgets by hand and some with
machines. Both types of work are perfect substitutes, and they are the only inputs necessary to
produce the gadgets.
a) Write down the equation of the firm's production function for the firm. Let G be the
number of gadgets assembled, M the number of hours the machines are used, and L the number
of hours of labor.
b) It costs the firm $30 per hour to use the machine and $10 per hour to hire a worker. The
firm wants to produce 120 gadgets. What is the cost-minimizing input quantities? Illustrate your
answer with a clearly labeled graph.
d) Derive the expression for the long-run total cost that the firm incurs, as a function of q.
Represent it in a diagram.

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