2. Fresh Steps, a manufacturer of cat litter, has estimated the following production function:Q = 50 LKIn this equation, Q is the output rate (quantity), L is the amount of labor Fresh Steps hires per period of time,and K is the amount of capital Fresh Steps uses per period of time.Fresh Steps pays $10 per unit of labor and $20 per unit of capital. The company's vice president formanufacturing has hired you to determine which combination of inputs the factory should use to produce6,400 units of output per period.a. Provide a recommendation for the vice president. (Calculations required).b. Suppose that the cost of labor increases to $20 per unit. Determine the effect of this change on your answerto part (a). (Calculations required).1c. Determine whether the Fresh Steps factory is subject to increasing or decreasing returns to scale.(Calculations required).

introduction The production function is the mix of inputs effectively used by producers to produce a…

Answered: a. Provide a recommendation for the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the following information on long run total costs: Output 1 2 3 4 5 6. 7 Total Costs 50 90 123 160 210 270 350 Decreasing returns to scale starts with the addition of the unit of output. Third Fifth Fourth Insufficient information
Output 0 Costs 0 Figure A (2) Input (3) Figure B (1) (4) Output Refer to the short-run production and cost data. In Figure A curve (1) is: total product and curve (2) is average product. total product and curve (2) is marginal product. average product and curve (2) is marginal product. Omarginal product and curve (2) is average product.
(40 marks) Coffee World has the following cost schedule for the production of coffees per day. Each labor can be hired for BDT 25 and the fixed input costs 1. BDT 25. Quantity of Capital Quantity of Output Quantity of Labor 4 10 3 3. 13 3 4 15 3 5 16 a) "The above production schedule shows that the firm is producing in the long run because quantity of labor can be changed." Explain why this statement is false. b) "In production, short run is a smaller period than the long run, for example, if the long run is 12 months then the short run should be less than 12 months". State why this statement is incorrect. c) Calculate marginal product of labor, fixed costs, variable costs, average fixed costs, average variable costs, average total costs and marginal costs, for all quantities, in a table. d) Sketch a typical LRATC and show all the important areas and points on it and show where the firm should produce.
Joe quits his computer programming job, where he was earning a salary of $70,000 per year, to start his own computer software business in a building that he owns and was previously renting out for $22,000 per year in his first year of business he has the following expenses: salary paid to himself, $40,000, rent, 50; and other expenses, $20,000. Find the accounting cost and the economic cost associated with Joe's computer software business. (Enter numeric responses using an integer) The accounting cost of Joe's business is 1 (Enter your response as an integer)
Cost (dollars) 150 100 50 0 5 10 D $15 20 B Output (teapots per day) 5. Refer to Figure above. Which one of the following statements are [TRUE/FALSE]? 0 A. The vertical gap between curves B and C is equal to average variable cost. [TRUE/FALSE] 0 B. Average fixed cost decreases with output. [TRUE/FALSE] 0 C. Line B comes closer to line C as output increases because of a decrease in average fixed cost. [TRUE/FALSE] D. The vertical gap between curves B and C is equal to average fixed cost. [TRUE/FALSE] 0 E. Curve D is the marginal cost curve. [TRUE/FALSE]
Suppose your business operates a machine at a cost of ?$200 per day whether it is used or not plus ?$25 for each hour it is used. Use the line drawing tool to draw the daily cost curve for this machine assuming an 8 hour day. Label the curve? 'cost'. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Quantity 1 2 3 4 5 6 7 Firm 4 Firm 3 Long-Run Total Cost (Dollars) Firm 1 Firm 1 180 350 510 660 800 930 1,050 Firm 2 120 250 390 540 700 870 1,050 Refer to Table above. Which firm has economies of scale and then diseconomies of scale over the entire range of output? Firm 2 Firm 3 150 300 450 600 750 900 1,050 Firm 4 210 340 490 660 850 1,060 1,290
2. As an employee of the Rays-R-Us Corporation (a solar panel company), you have been asked to determine the nature of their long-run cost structure. Some cost data has been collected for you and appears in the table below. Quantity of Generators Labor Costs Tools Cost $2 $4 $7 $8 $15 $24 $28 $41 $65 $80 Total Cost Long Run Average Cost $10 12 14 16 20 30 42 1 4 5 8 9 10 70 100 (a) Fill in the missing values in the table. (b) Graph the firm's long-run average cost curve below. (c) Determine the range of output levels over which there exists economies and diseconomies of scale, and mark these ranges on your graph.
30 i of ATC, ATC2 ATC3 -LRATC Output (Q) The diagram above shows the long-run ATC curve for a firm with: Select one: a. diseconomies of scale. b. decreasing returns to scale. С. economies of scale. d. constant returns to scale. $$
shows the long-run average costs for Inmode, a manufacturer of Internet modems. Quantity per Day Average Cost ($) a) At what output is minimum efficient scale achieved? Output: b) with what output do diseconomies of scale begin? Output: 1 95 2 85 3 75 4 70 5 65 6 65 7 75 8 100
In production process if we keep on adding successive units of a variable resources to fixed resources Select one: a) The total product will increase by diminshing amounts; reach a maximum and then decline b) None of the answers are correct c) The total product will keep on increasing and will never reach to a maximum d) The total product will keep on increasing and will stop at a maximum e) The total product will keep on decreasing and will stop at a maximum
(Figure: Cost Schedule) Quantity Fixed Cost Fixed Cost 0 1 2 3 4 5 A $13 B) $9.40 C) $47 $11 11 11 11 11 11 D) $2.20 Variable Cost . SO 3 8 14 23 36 Marginal Cost - In the figure, what is the average total cost to produce 5 units? $3 56 6 9 13

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