5) Sarah's Pretzel plant has the following short-run cost function: C(g, K)wg3+ 50K where q is Sarah's%3D3/21000Koutput level, w is the cost of a labor hour, and K is the number of pretzel machines Sarah leases. Sarah'sZwq2short-run marginal cost curve is Mc(g, K) =1000KAt the moment, Sarah leases 10 pretzel machines, the3/2cost of a labor hour is $6.85, and she can sell all the output she produces at $35 per unit. If the cost per laborhour rises to $7.50, what happens to Sarah's optimal level of output and profits?

Cost refers to the amount the is incurred for using factors of production to produce goods. Profit…

5) Sarah's Pretzel plant has the following short-run cost function: Cg, K) wg3 + 50K where q is Sarah's 312 1000K output level, w is the cost of a labor hour, and K is the number of pretzel machines Sarah leases. Sarah's short-run marginal cost curve is MCq, K) = -Swg At the moment, Sarah leases 10 pretzel machines, the 1000K/2 cost of a labor hour is $6.85, and she can sell all the output she produces at $35 per unit. If the cost per labor hour rises to $7.50, what happens to Sarah's optimal level of output and profits?

5) Sarah's Pretzel plant has the following short-run cost function: Cg, K) wg3 + 50K where q is Sarah's 312 1000K output level, w is the cost of a labor hour, and K is the number of pretzel machines Sarah leases. Sarah's short-run marginal cost curve is MCq, K) = -Swg At the moment, Sarah leases 10 pretzel machines, the 1000K/2 cost of a labor hour is $6.85, and she can sell all the output she produces at $35 per unit. If the cost per labor hour rises to $7.50, what happens to Sarah's optimal level of output and profits?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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