Dmitri's Performance Pizza is a small restaurant in Philadelphia that sells gluten-free pizzas. Dmitri's very tiny kitchen has barely enough room for th four ovens in which his workers bake the pizzas. Dmitri signed a lease obligating him to pay the rent for the four ovens for the next year. Because of this, and because Dmitri's kitchen cannot fit more than four ovens, Dmitri cannot change the number of ovens he uses in his production of pizzas in the short run. However, Dmitri's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Dmitri lets them know how many workers he needs for each day of the week. In the short run, these workers are variable inputs, and the over are fixed inputs.
Dmitri's Performance Pizza is a small restaurant in Philadelphia that sells gluten-free pizzas. Dmitri's very tiny kitchen has barely enough room for th four ovens in which his workers bake the pizzas. Dmitri signed a lease obligating him to pay the rent for the four ovens for the next year. Because of this, and because Dmitri's kitchen cannot fit more than four ovens, Dmitri cannot change the number of ovens he uses in his production of pizzas in the short run. However, Dmitri's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Dmitri lets them know how many workers he needs for each day of the week. In the short run, these workers are variable inputs, and the over are fixed inputs.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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2. Inputs and outputs
Dmitri's Performance Pizza is a small restaurant in Philadelphia that sells gluten-free pizzas. Dmitri's very tiny kitchen has barely enough room for the four ovens in which his workers bake the pizzas. Dmitri signed a lease obligating him to pay the rent for the four ovens for the next year. Because of this, and because Dmitri's kitchen cannot fit more than four ovens, Dmitri cannot change the number of ovens he uses in his production of pizzas in the short run.
Transcribed Image Text:20
2
3
4
LABOR (Number of workers)
Suppose that labor is Dmitri's only variable cost and that he has a fixed cost of $20 per day and pays each of his workers $30 per day.
Use the orange points (square symbol) to plot Dmitri's total cost curve on the following graph using the quantities from the preceding table.
200
180
Total Cost
180
140
120
100
80
60
40
20
20
40
60
80
100
120
140
180
180
200
QUANTITY OF OUTPUT (Pizzas)
True or False: The shape of the production function reflects the law of increasing marginal returns.
True
False
TOTAL COST (Dollars)
Transcribed Image Text:2. Inputs and outputs
Dmitri's Performance Pizza is a small restaurant in Philadelphia that sells gluten-free pizzas. Dmitri's very tiny kitchen has barely enough room for the
four ovens in which his workers bake the pizzas. Dmitri signed a lease obligating him to pay the rent for the four ovens for the next year. Because of
this, and because Dmitri's kitchen cannot fit more than four ovens, Dmitri cannot change the number of ovens he uses in his production of pizzas in
the short run.
However, Dmitri's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday,
Dmitri lets them know how many workers he needs for each day of the week. In the short run, these workers are variable v inputs, and the ovens
are fixed
v inputs.
Dmitri's daily production schedule is presented in the following table.
Fill in the blanks to complete the Marginal Product of Labor column for each worker.
Marginal Product of Labor
(Pizzas)
Labor
Output
(Pizzas)
(Number of workers)
40
1
60
100
100
180
3
130
250
4
150
340
5
160
On the following graph, plot Dmitri's production function using the green points (triangle symbol).
Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.
Hint: Be sure to plot the first point at (0, 0).
(?
200
180
Production Function
160
140
120
100
80
QUANTITY OF OUTPUT (Pizzas)
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