The Brain Bucket Company (BBC) produces helmets for winter sports. It hasproduction facilities in Toronto and Winnipeg. The production function for theToronto facility isQrLT,(1)where LT is the quantity of labour hired in Toronto.The production function for the Winnipeg facility isVLw.(2)Qwwhere Lw is the quantity of labour hired in Winnipeg. The wage rate in Winnipeg isone and the wage rate in Toronto is two. Answer the following:(a) If BBC wishes to produce Q helmets at the lowest possible cost, how should itdistribute production between the two cities? Use your answer to find a functionshowing the cost of producing Q helmets. (b) Suppose the production function for the Toronto facility is given by QT = 2LTinstead, while the production function for the Winnipeg facility remains asabove. What is the cost of producing Q helmets? How should output beallocated between the two cities? Are there any situations in this case whereonly one facility would be used? Explain.%3|

The Brain Bucket Company (BBC) produces helmets for winter sports. It has production facilities in Toronto and Winnipeg. The production function for the Toronto facility is (1) where LT is the quantity of labour hired in Toronto. The production function for the Winnipeg facility is Qw VLw, (2) where Lw is the quantity of labour hired in Winnipeg. The wage rate in Winnipeg is one and the wage rate in Toronto is two. Answer the following:

The Brain Bucket Company (BBC) produces helmets for winter sports. It has production facilities in Toronto and Winnipeg. The production function for the Toronto facility is (1) where LT is the quantity of labour hired in Toronto. The production function for the Winnipeg facility is Qw VLw, (2) where Lw is the quantity of labour hired in Winnipeg. The wage rate in Winnipeg is one and the wage rate in Toronto is two. Answer the following:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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