firm has the following production function: q = 8KL, where q is the weekly output, K is the number of machines and L is the number of workers. Each machine rents for $50,000 per week and each worker costs $2,000 per week. The total cost includes the cost of machines and labor, as well as an additional $5,000 per unit of output for raw materials. The firm currently runs a single factory with 10 machines. Assume that capital is fixed in the short run. (a) How many workers are needed to produce 2,000 units of output per week (in the short run)? (b) How much does it cost to produce
firm has the following production function: q = 8KL, where q is the weekly output, K is the number of machines and L is the number of workers. Each machine rents for $50,000 per week and each worker costs $2,000 per week. The total cost includes the cost of machines and labor, as well as an additional $5,000 per unit of output for raw materials. The firm currently runs a single factory with 10 machines. Assume that capital is fixed in the short run. (a) How many workers are needed to produce 2,000 units of output per week (in the short run)? (b) How much does it cost to produce
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A firm has the following production function:
q = 8KL,
where q is the weekly output, K is the number of machines and L is the number of workers. Each machine rents for $50,000 per week and each worker costs $2,000 per week. The total cost includes the cost of machines and labor, as well as an additional $5,000 per unit of output for raw materials. The firm currently runs a single factory with 10 machines. Assume that capital is fixed in the short run.
(a) How many workers are needed to produce 2,000 units of output per week (in the short run)?
(b) How much does it cost to produce q units of output per week (in the short-run)? [The answer I expect is a particular function of q.
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