3. Hrish manages a small bakery with industrial ovens o and bakers b. The bakery produces gourmet cupcakes, priced at p per dozen cupcakes, ac- cording to production function q = f(0,b) = o'/261/2, where q is dozens produced. Quite unexpectedly, the city has lifted the Covid ban on gath- erings, and orders are flooding in for cupcakes. Hrish cannot obtain more industrial ovens at the moment, and getting his bakers to work more hours requires overtime pay, so his cost function for the weekend is C = ro+ wb3/2 a. What are the short run variable costs? Fixed costs? b. What is the short run demand for bakers, as a function of quantity produced and fixed oven supply? What are short run costs? c. What is short run average variable cost and marginal cost? d. Suppose o = 4, w = the short run supply curve. What is the minimum price that leads Hrish to producing cupcakes this weekend? 16, and r = .1. Plot the short run AVC, MC and e. Hrish totals the orders to be 100 dozen (g minimum price per dozen he is willing to accept to produce 100 dozen cupcakes this weekend? 100). What is the f. Hrish is able to sell his cupcakes at $12 per dozen, and he fills all 100 orders. What is Hrish's profit? Only answer to question e. is needed! Others are only here for reference.
3. Hrish manages a small bakery with industrial ovens o and bakers b. The bakery produces gourmet cupcakes, priced at p per dozen cupcakes, ac- cording to production function q = f(0,b) = o'/261/2, where q is dozens produced. Quite unexpectedly, the city has lifted the Covid ban on gath- erings, and orders are flooding in for cupcakes. Hrish cannot obtain more industrial ovens at the moment, and getting his bakers to work more hours requires overtime pay, so his cost function for the weekend is C = ro+ wb3/2 a. What are the short run variable costs? Fixed costs? b. What is the short run demand for bakers, as a function of quantity produced and fixed oven supply? What are short run costs? c. What is short run average variable cost and marginal cost? d. Suppose o = 4, w = the short run supply curve. What is the minimum price that leads Hrish to producing cupcakes this weekend? 16, and r = .1. Plot the short run AVC, MC and e. Hrish totals the orders to be 100 dozen (g minimum price per dozen he is willing to accept to produce 100 dozen cupcakes this weekend? 100). What is the f. Hrish is able to sell his cupcakes at $12 per dozen, and he fills all 100 orders. What is Hrish's profit? Only answer to question e. is needed! Others are only here for reference.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:3. Hrish manages a small bakery with industrial ovens o and bakers b. The
bakery produces gourmet cupcakes, priced at p per dozen cupcakes, ac-
cording to production function q =
produced. Quite unexpectedly, the city has lifted the Covid ban on gath-
erings, and orders are flooding in for cupcakes. Hrish cannot obtain more
industrial ovens at the moment, and getting his bakers to work more hours
requires overtime pay, so his cost function for the weekend is
f(0, 6) = o!/261/2, where q is dozens
%3D
C = ro+wb³/2
a. What are the short run variable costs? Fixed costs?
b. What is the short run demand for bakers, as a function of quantity
produced and fixed oven supply? What are short run costs?
c. What is short run average variable cost and marginal cost?
4, w = 16, and r = .1. Plot the short run AVC, MC and
d. Suppose o=
the short run supply curve. What is the minimum price that leads
Hrish to producing cupcakes this weekend?
e. Hrish totals the orders to be 100 dozen (g
minimum price per dozen he is willing to accept to produce 100 dozen
cupcakes this weekend?
100). What is the
f. Hrish is able to sell his cupcakes at $12 per dozen, and he fills all 100
orders. What is Hrish's profit?
Only answer to question e. is needed!
Others are only here for reference.
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