You manage a store that mass-produces candies by teams of workers using assembly candy machines. The technology is summarized by the production function q = 3 LK where q is the number of candies per week in thousands, K is the number of assembly candy machines, and L is the number of labor teams. Each candy assembly machine rents for r= $6,000 per week, and each team costs w = $1000 per week. Candy costs are given by the cost of labor teams and machines, plus $600 per thousand of candies for ingredients. Your store has a fixed installation of 2 candy assembly machines as part of its design. a. What is the cost function for your store – namely, how much would it cost to produce q candies? What are average and marginal costs for producing q candies? How do average costs vary with output? b. How many teams are required to produce 3 (thousands) candies? What is the average
You manage a store that mass-produces candies by teams of workers using assembly candy machines. The technology is summarized by the production function q = 3 LK where q is the number of candies per week in thousands, K is the number of assembly candy machines, and L is the number of labor teams. Each candy assembly machine rents for r= $6,000 per week, and each team costs w = $1000 per week. Candy costs are given by the cost of labor teams and machines, plus $600 per thousand of candies for ingredients. Your store has a fixed installation of 2 candy assembly machines as part of its design. a. What is the cost function for your store – namely, how much would it cost to produce q candies? What are average and marginal costs for producing q candies? How do average costs vary with output? b. How many teams are required to produce 3 (thousands) candies? What is the average
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education