Answered: To produce a recorded DVD, a firm uses…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

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.

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