A firm produces bread (B). The company wants to lease new equipment. The market offers new high-speed ovens (H) and slower ovens (S) with an older technology. The high-speed ovens can produce twice as much bread in the same amount time. a) Derive the production function. b) The high-speed ovens cost 100 Euros per month and the slower ovens costs 70 Euros per month. In which type of ovens should the company invest? c) If the price of the high-speed ovens remains unchanged, calculate the price of the slow-ovens, at which the company could be indifferent in leasing only high-speed ovens, slow-ovens or possibly a combination of both.
A firm produces bread (B). The company wants to lease new equipment. The market offers new high-speed ovens (H) and slower ovens (S) with an older technology. The high-speed ovens can produce twice as much bread in the same amount time. a) Derive the production function. b) The high-speed ovens cost 100 Euros per month and the slower ovens costs 70 Euros per month. In which type of ovens should the company invest? c) If the price of the high-speed ovens remains unchanged, calculate the price of the slow-ovens, at which the company could be indifferent in leasing only high-speed ovens, slow-ovens or possibly a combination of both.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
A firm produces bread (B). The company wants to lease new equipment. The
market offers new high-speed ovens (H) and slower ovens (S) with an older
technology. The high-speed ovens can produce twice as much bread in the same
amount time.
a) Derive the production function.
b) The high-speed ovens cost 100 Euros per month and the slower ovens costs 70
Euros per month. In which type of ovens should the company invest?
c) If the
slow-ovens, at which the company could be indifferent in leasing only high-speed
ovens, slow-ovens or possibly a combination of both.

Transcribed Image Text:A firm produces bread (B). The company wants to lease new equipment. The
market offers new high-speed ovens (H) and slower ovens (S) with an older
technology. The high-speed ovens can produce twice as much bread in the same
amount time.
a) Derive the production function.
b) The high-speed ovens cost 100 Euros per month and the slower ovens costs 70
Euros per month. In which type of ovens should the company invest?
c) If the price of the high-speed ovens remains unchanged, calculate the price of the
slow-ovens, at which the company could be indifferent in leasing only high-speed
ovens, slow-ovens or possibly a combination of both.
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