To produce a recorded DVD, a firm uses one blank disk D and the services of a recording machine M for one hour. The production function in this case is given by: Q = min{D, M} (a) Using this production function, find the firm’s demand function for recording machine-hours M. (b) ) Draw the total product, average product, and marginal product of M curves for the production function identified (c) Let PM denote the hourly price of renting the recording machine M and PD denote the price of one blank disk. Use your answer from (b) to calculate the firm’s short-run total, average, and marginal cost functions.
To produce a recorded DVD, a firm uses one blank disk D and the services of a recording machine M for one hour. The production function in this case is given by: Q = min{D, M} (a) Using this production function, find the firm’s demand function for recording machine-hours M. (b) ) Draw the total product, average product, and marginal product of M curves for the production function identified (c) Let PM denote the hourly price of renting the recording machine M and PD denote the price of one blank disk. Use your answer from (b) to calculate the firm’s short-run total, average, and marginal cost functions.
Chapter10: Cost Functions
Section: Chapter Questions
Problem 10.7P
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To produce a recorded DVD, a firm uses one blank disk D and the services of a recording machine M for one hour. The production function in this case is given by: Q = min{D, M}
(a) Using this production function, find the firm’s demand function for recording machine-hours M.
(b) ) Draw the total product, average product, and marginal product of M
(c) Let PM denote the hourly price of renting the recording machine M and PD denote the price of one blank disk. Use your answer from (b) to calculate the firm’s short-run total, average, and marginal cost functions.
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