A moving company requires one van and two workers in one hour to do one task. If labour cost is $20/hour per worker and renting a van costs $40/hour. What is the total cost of cost- minimizing input combination if the company wishes to do 20 tasks? Depict the scale and substitution effects if the wage decreases to $15/hour if the total cost does not change.

A moving company requires one van and two workers in one hour to do one task. If labour cost is $20/hour per worker and renting a van costs $40/hour. What is the total cost of cost- minimizing input combination if the company wishes to do 20 tasks? Depict the scale and substitution effects if the wage decreases to $15/hour if the total cost does not change.

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

Chapter4: Extent (how Much) Decisions

Section: Chapter Questions

Problem 3MC

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