Problem 3. Maria Bakery sells cupcakes. The production of cupcakes takes both raw ingredients, and l is hours of labor. The daily production function for cupcakes is given by q = ½ * g * l + l^2 - 20 where output is in dozens of cupcakes, g is poinds of raw ingredients, and l is hours of labor. The cost of a pound of raw ingredients is pg = $1 while the cost of an hour of labor is pl = $12. What is the optimal ‘number’ of pounds of raw ingredients to use per hour of labor? (Hint: Consider the marginal productivity of investment of the inputs.)A standard day requires about 25 dozen cupcakes to be make. What is the cost minimizing production plan for 25 dozen cupcakes? (Hint: Find the cost minimizing l and g such that dq = 25.)How much will this cost?

To find the optimal number of pounds of raw ingredients to use per hour of labor and the…

Answered: Problem 3. Maria Bakery sells…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Problem 3. Maria Bakery sells cupcakes. The production of cupcakes takes both raw ingredients, and l is hours of labor. The daily production function for cupcakes is given by

q = ½ * g * l + l^2 - 20

where output is in dozens of cupcakes, g is poinds of raw ingredients, and l is hours of labor. The cost of a pound of raw ingredients is pg = $1 while the cost of an hour of labor is pl = $12.

What is the optimal ‘number’ of pounds of raw ingredients to use per hour of labor? (Hint: Consider the marginal productivity of investment of the inputs.)
A standard day requires about 25 dozen cupcakes to be make. What is the cost minimizing production plan for 25 dozen cupcakes? (Hint: Find the cost minimizing l and g such that dq = 25.)
How much will this cost?

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