Baker premium is a company producing buns in a rented factory with the rental cost of $100 per day. The wage per worker is $40 per day. The table below shows the daily amount of buns produced with a different number of workers employed in the factory Workers Buns 1 30 70 130 4 210 260 300 7 320 8 330 (a) Compute and explain the minimum price per bun for Baker Premium to operate in the short-run and in the long-run (b) If the price per bun is $1.50, determine the optimal output and compute the daily profit or loss incurred by Baker Premium. Explain why this ouput is optimal (c) Consider the utility company in a city which is the only licensed water supplier in the city. The demand for water is given by P = 10 - 0.006Q and the marginal cost of the company is given by MC = 2 + 0.004Q. Identify the optimal output, the market price, the consumer surplus, the producer surplus and the deadweight loss in the water market. 3.
Baker premium is a company producing buns in a rented factory with the rental cost of $100 per day. The wage per worker is $40 per day. The table below shows the daily amount of buns produced with a different number of workers employed in the factory Workers Buns 1 30 70 130 4 210 260 300 7 320 8 330 (a) Compute and explain the minimum price per bun for Baker Premium to operate in the short-run and in the long-run (b) If the price per bun is $1.50, determine the optimal output and compute the daily profit or loss incurred by Baker Premium. Explain why this ouput is optimal (c) Consider the utility company in a city which is the only licensed water supplier in the city. The demand for water is given by P = 10 - 0.006Q and the marginal cost of the company is given by MC = 2 + 0.004Q. Identify the optimal output, the market price, the consumer surplus, the producer surplus and the deadweight loss in the water market. 3.
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.9P
Related questions
Question
![Baker premium is a company producing buns in a rented factory with the rental cost of $100 per day. The
wage per worker is $40 per day. The table below shows the daily amount of buns produced with a
different number of workers employed in the factory
Workers
Buns
1
30
2
70
130
4
210
260
6
300
7
320
8
330
(a) Compute and explain the minimum price per bun for Baker Premium to operate in the short-run and in
the long-run
(b) If the price per bun is $1.50, determine the optimal output and compute the daily profit or loss incurred
by Baker Premium. Explain why this ouput is optimal
(c) Consider the utility company in a city which is the only licensed water supplier in the city. The demand
for water is given by P = 10 - 0.006Q and the marginal cost of the company is given by MC = 2 + 0.004Q.
Identify the optimal output, the market price, the consumer surplus, the producer surplus and the
deadweight loss in the water market.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc7257e69-644b-4900-9701-713ca142ba49%2F50b896ab-0cfc-4dd3-9437-1fe393ed3877%2Fabq4k7c_processed.png&w=3840&q=75)
Transcribed Image Text:Baker premium is a company producing buns in a rented factory with the rental cost of $100 per day. The
wage per worker is $40 per day. The table below shows the daily amount of buns produced with a
different number of workers employed in the factory
Workers
Buns
1
30
2
70
130
4
210
260
6
300
7
320
8
330
(a) Compute and explain the minimum price per bun for Baker Premium to operate in the short-run and in
the long-run
(b) If the price per bun is $1.50, determine the optimal output and compute the daily profit or loss incurred
by Baker Premium. Explain why this ouput is optimal
(c) Consider the utility company in a city which is the only licensed water supplier in the city. The demand
for water is given by P = 10 - 0.006Q and the marginal cost of the company is given by MC = 2 + 0.004Q.
Identify the optimal output, the market price, the consumer surplus, the producer surplus and the
deadweight loss in the water market.
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