4. What if the production function for education (E) is: E=T06 B08, where T is teachers and B is buildings and materials. The cost of each teacher is $54, the material cost $144 per unit and the school has a budget of $5,000 (numbers are in ,000, but this can be ignored) a. Construct the isocost equation. b. With a MPT = 0.6T04B0.8 and MPB = 0.8T06B-02, determine the appropriate input mix to get the greatest output. Also, compute output. c. Explain what would happen in the short-run (keeping capital fixed) to the appropriate input mix if the budget where changed to $4,250. Would the input combination be different in the long-run? If so, how would it change? Explain. 4. What if the production function for education (E) is: E=T06 B08, where T is teachers and B is buildings and materials. The cost of each teacher is $54, the material cost $144 per unit and the school has a budget of $5,000 (numbers are in ,000, but this can be ignored) a. Construct the isocost equation. b. With a MPT = 0.6T04B0.8 and MPB = 0.8T06B-02, determine the appropriate input mix to get the greatest output. Also, compute output. c. Explain what would happen in the short-run (keeping capital fixed) to the appropriate input mix if the budget where changed to $4,250. Would the input combination be different in the long-run? If so, how would it change? Explain.
4. What if the production function for education (E) is: E=T06 B08, where T is teachers and B is buildings and materials. The cost of each teacher is $54, the material cost $144 per unit and the school has a budget of $5,000 (numbers are in ,000, but this can be ignored) a. Construct the isocost equation. b. With a MPT = 0.6T04B0.8 and MPB = 0.8T06B-02, determine the appropriate input mix to get the greatest output. Also, compute output. c. Explain what would happen in the short-run (keeping capital fixed) to the appropriate input mix if the budget where changed to $4,250. Would the input combination be different in the long-run? If so, how would it change? Explain. 4. What if the production function for education (E) is: E=T06 B08, where T is teachers and B is buildings and materials. The cost of each teacher is $54, the material cost $144 per unit and the school has a budget of $5,000 (numbers are in ,000, but this can be ignored) a. Construct the isocost equation. b. With a MPT = 0.6T04B0.8 and MPB = 0.8T06B-02, determine the appropriate input mix to get the greatest output. Also, compute output. c. Explain what would happen in the short-run (keeping capital fixed) to the appropriate input mix if the budget where changed to $4,250. Would the input combination be different in the long-run? If so, how would it change? Explain.
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
Chapter7: Economies Of Scale And Scope
Section: Chapter Questions
Problem 7.1IP
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Transcribed Image Text:4. What if the production function for education (E) is: E=T06 B08, where T is teachers and B is
buildings and materials. The cost of each teacher is $54, the material cost $144 per unit and the
school has a budget of $5,000 (numbers are in ,000, but this can be ignored)
a. Construct the isocost equation.
b. With a MPT = 0.6T04B0.8 and MPB = 0.8T06B-02, determine the appropriate input mix to get
the greatest output. Also, compute output.
c. Explain what would happen in the short-run (keeping capital fixed) to the appropriate input
mix if the budget where changed to $4,250. Would the input combination be different in the
long-run? If so, how would it change? Explain.
Transcribed Image Text:4. What if the production function for education (E) is: E=T06 B08, where T is teachers and B is
buildings and materials. The cost of each teacher is $54, the material cost $144 per unit and the
school has a budget of $5,000 (numbers are in ,000, but this can be ignored)
a. Construct the isocost equation.
b. With a MPT = 0.6T04B0.8 and MPB = 0.8T06B-02, determine the appropriate input mix to get
the greatest output. Also, compute output.
c. Explain what would happen in the short-run (keeping capital fixed) to the appropriate input
mix if the budget where changed to $4,250. Would the input combination be different in the
long-run? If so, how would it change? Explain.
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