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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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
13) A firm's total cost function is TC = 0.5Q², where Q is the output level. What is the returns to scale of the firm's production function? A) Increasing returns to scale. B) Decreasing returns to scale. C) Constant returns to scale. D) Negative returns. E) None of the above.
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