! 3. Rodrigo's again. Do you remember Rodrigo's, the Inwood-based company wemet in HW #4 that provides business services to convenience stores? Recall thatRodrigo's rents his office space for $3,000 and pays its employees $100 per hour.Monthly output, expressed in billable hours, is given by y = Ak'/315/9, where ldenotes the overall number of hours worked by the employees, k is capital andA is TFP. The market for services to convenience stores is very competitive. We$200, 000, A = 1, and the current rate per hour charged$250. Rodrigo's management has no intention to move fromhave learned that kto clients is ptheir current facilities. [Hint: Carry out your computations in symbolic algebra.Replace variables with their numerical values only at the end.](a) Compute and draw in the same graph marginal cost, average cost, averagefixed cost and average variable cost. How to they relate to each other?(b) Compute Rodrigo's optimal output and its profits.(c) Compute the hourly rate p such that Rodrigo's breaks even, i.e. its profitsare identically zero. How much will Rodrigo's produce at that level of out-put? What is Rodrigo's average cost at that price? What about its averagevariable cost? .(d) Compute Rodrigo's short-run supply function.

AC stands for average cost, which is the total cost of production divided by the quantity produced.…

(a) Compute and draw in the same graph marginal cost, average cost, average fixed cost and average variable cost. How to they relate to each other? (b) Compute Rodrigo's optimal output and its profits. (c) Compute the hourly rate p such that Rodrigo's breaks even, i.e. its profits are identically zero. How much will Rodrigo's produce at that level of out- put? What is Rodrigo's average cost at that price? What about its average variable cost? (d) Compute Rodrigo's short-run supply function.

(a) Compute and draw in the same graph marginal cost, average cost, average fixed cost and average variable cost. How to they relate to each other? (b) Compute Rodrigo's optimal output and its profits. (c) Compute the hourly rate p such that Rodrigo's breaks even, i.e. its profits are identically zero. How much will Rodrigo's produce at that level of out- put? What is Rodrigo's average cost at that price? What about its average variable cost? (d) Compute Rodrigo's short-run supply function.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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