Use the following information towork Problem 6.The table shows the productionfunction of Bonnie's BalloonRides. Bonnie's pays $500 a dayfor each balloon it rents and $25a day for each balloon operator ithires.Labor(workersper day)1020304050BalloonsPlant 16101315161Output(rides per day)Plant 210151820212Plant 338222313182425Plant 415122222024262746.a. Graph the ATC curves for Plant 1 and Plant 2. Explain why these ATC curves differ.6.b. Graph the ATC curves for Plant 3 and Plant 4. Explain why these ATC curves differ.6.c. On Bonnie's LRAC curve, what is the average cost of producing 15 rides and 18 rides a day?6.d. Explain how Bonnie's uses its long-run average cost curve to decide how many balloons to rent.

Production Function:A production function is a mathematical equation or graphical representation…

Use the following information to work Problem 6. The table shows the production function of Bonnie's Balloon Rides. Bonnie's pays $500 a day for each balloon it rents and $25 a day for each balloon operator it hires. Labor (workers per day) 10 20 30 40 50 Balloons Plant 1 6 10 13 15 16 1 Output (rides per day) Plant 2 10 15 18 20 21 2 Plant 3 13 18 22 24 25 3 Plant 4 15 20 524274 26 6.a. Graph the ATC curves for Plant 1 and Plant 2. Explain why these ATC curves differ. 6.b. Graph the ATC curves for Plant 3 and Plant 4. Explain why these ATC curves differ. 6.c. On Bonnie's LRAC curve, what is the average cost of producing 15 rides and 18 rides a day? 6.d. Explain how Bonnie's uses its long-run average cost curve to decide how many balloons to rent.

Use the following information to work Problem 6. The table shows the production function of Bonnie's Balloon Rides. Bonnie's pays $500 a day for each balloon it rents and $25 a day for each balloon operator it hires. Labor (workers per day) 10 20 30 40 50 Balloons Plant 1 6 10 13 15 16 1 Output (rides per day) Plant 2 10 15 18 20 21 2 Plant 3 13 18 22 24 25 3 Plant 4 15 20 524274 26 6.a. Graph the ATC curves for Plant 1 and Plant 2. Explain why these ATC curves differ. 6.b. Graph the ATC curves for Plant 3 and Plant 4. Explain why these ATC curves differ. 6.c. On Bonnie's LRAC curve, what is the average cost of producing 15 rides and 18 rides a day? 6.d. Explain how Bonnie's uses its long-run average cost curve to decide how many balloons to rent.

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

Use the following information to
work Problem 6.
The table shows the production
function of Bonnie's Balloon
Rides. Bonnie's pays $500 a day
for each balloon it rents and $25
a day for each balloon operator it
hires.
Labor
(workers
per day)
10
20
30
40
50
Balloons
Plant 1
6
10
13
15
16
1
Output
(rides per day)
Plant 2
10
15
18
20
21
2
Plant 3
382223
13
18
24
25
Plant 4
15
12222
20
24
26
27
4
6.a. Graph the ATC curves for Plant 1 and Plant 2. Explain why these ATC curves differ.
6.b. Graph the ATC curves for Plant 3 and Plant 4. Explain why these ATC curves differ.
6.c. On Bonnie's LRAC curve, what is the average cost of producing 15 rides and 18 rides a day?
6.d. Explain how Bonnie's uses its long-run average cost curve to decide how many balloons to rent.

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