#9 *Remember the least cost method is a lot like the utility maximizing rule from chapter one.However, here we will make sure that we follow this formula:Marginal Product of Labor/Price of Labor = Marginal Product of Capital/Price of CapitalIf this ends up being equal then they are using the optimal number of employees and capital(machines). If one is greater then the business would want to use that one more until thenumbers become equal.9) A chocolate company makes truffles using labor and capital. The company pays theworkers $12 per hour and machines used to make truffles costs them $4 per hour. The lastemployee produced 60 more truffles. The machines last produced 24 more truffles. Whichmethod of production should this business use more of to minimize costs? Show your math.

The problem of reducing costs is, in mathematics, a problem. In limited optimization. The firm wants…

9) A chocolate company makes truffles using labor and capital. The company pays the workers $12 per hour and machines used to make truffles costs them $4 per hour. The last employee produced 60 more truffles. The machines last produced 24 more truffles. Which method of production should this business use more of to minimize costs? Show your math.

9) A chocolate company makes truffles using labor and capital. The company pays the workers $12 per hour and machines used to make truffles costs them $4 per hour. The last employee produced 60 more truffles. The machines last produced 24 more truffles. Which method of production should this business use more of to minimize costs? Show your math.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter7: Production And Cost In The Firm

Section: Chapter Questions

Problem 18PAE

See similar textbooks

Similar questions

Would you consider an interest payment on a loan to a film an explicit or implicit cost?
How do we calculate each of the following: marginal cost, average total cost, and average variable cost?
In recent years, the United States has experienced large increases in oil production due in large part to a new technology, hydraulic fracturing ("fracking"). Fracking involves injecting a mixture of water, sand, and chemicals into rock formations at high pressure to release oil and natural gas. An article in the Wall Street Journal indicates that economies of scale in fracking may be considerably smaller than in conventional oil drilling. If this view is cor- rect, what would the likely consequences be for the num- ber of firms drilling for oil in the United States?
Problem 5 The production function of COVID vaccines for firm O is given by v° = VKL. and requires at least one unit of labor L and one unit of capital K, i.e. L>1 und K > 1. a) After a year and some thorough research, the production function changes to VO = V4KL. (I) Compute the marginal products with respect to labor L and capital K for both production functions ! (II) Which company's the marginal products is/are larger ? What happened to the original level of production after a year ? (III) Do the production functions exhibit increasing, constant or decreasing returns to scale ? b) Suppose now, we compare production functions of company O that discovered the vaccine to a second company M. The production function of M is given by VM = K0.6 L0.4 (I) Compute the marginal products with respect to labor L and capital K for this pro- duction function ! (II) If both companies used the same equal amount of labor L and capital K, which of them will generate more output ? (III) If the…
13. Suppose you have a production technology given by f(x1, x2) = min{2x₁, x2} and you are producing at the point where x₁ = 10 and x₂ = 20. (a) Explain in words what we mean (generally) by the ‘marginal product' of an input in production. (b) For the production technology in this question and the initial point x₁ = 10 and x2 = 20, what is the marginal product of a small increase in input 1? (c) Suppose input 2 increases and you are now at the initial point x₁ = 10 and x2 = 30. Relative to your answer in part (b), does the marginal product of input 1 decrease, increase, or stay constant? Explain briefly.
Question: Orla manages a loom that produces flags (F) using thread (T) and dye (D) as inputs. Herproduction function is given by: Q(T,D) = (T1/2 D1/2)1/2*For this problem, assume F, T, and D are infinitely divisible so you don’t need to worryabout restricting to whole-number answers. a.) Does Orla’s production function exhibit increasing, constant, or decreasing returns toscale? Explain. b.) Set up Orla’s cost-minimization problem to find the lowest-cost combination of inputsrequired to produce a specific level of output (bar Q) given factor prices PT and PD. (Note: You can write this either as a minimization subject to constraints or in Lagrangian form. *You do not need to solve it.)
Least Cost Method: *Remember the least cost method is a lot like the utility maximizing rule from chapter one. However, here we will make sure that we follow this formula: Marginal Product of Labor/Price of Labor = Marginal Product of Capital/Price of Capital If this ends up being equal then they are using the optimal number of employees and capital (machines). If one is greater then the business would want to use that one more until the numbers become equal. 6)ABC company is using labor and capital to build widgets The last employee produced 20 more widgets and their wage was $10 per hour. The last unit of capital produced 40 more and cost $20. Use the least cost method formula above to state if they are using the least cost Method of production. If they aren't using the least cost method should they use more workers or machines?? Show work
6. The Miller Company is trying to determine the combination of inputs to produce a specific volume of bar stools ordered. The production function for the firm is given: Q = 14LK? The wage of a worker is $80/day and the price of a machine is $240/day. If they need to produce 4,536 bar stools per day: a. What is the optimal combination of Labor and Capital, i.e. find the cost-minimizing combination of inputs to produce 4,536 bar stools? b. What is the total cost of using the inputs found in part a?
7 which of the following are examples of fixed-proportions production functions?
Need help with 4,5 & 6 4) Determine the cost of 1 gallon of gasoline. Calculate the labor cost equivalent of those 2 people to push a car 40 miles. (You have to make assumptions on how much you would have to pay someone per hour to push a car). How much cheaper is it to use a gallon of gasoline to move a car 40 miles down the road as opposed to paying 2 people to push the car 40 miles down the road. 5) How much energy (in Joules and in food calories) do you estimate it would take two people to push a car 40 miles down the road. (1 food calorie = 4,186 J) The basic metabolic rate for the human body is about 60 (food) calories per hour. A runner running 10 miles at 6 minutes per mile burns about 1000 food calories per hour. Estimate how many calories per hour a person pushing a car at walking speed would burn (remember there are 2 people pushing at the same time) 6) Assuming that the car was traveling at 45 miles per hour (a very efficient speed for a car). How long does it take…
Refer to the graph below: y2 The graph above illustrates a production set of a firm. (a) Which assumption(s) do(es) the production set violates? Explain. (b) Suppose the firm decided to scale all inputs up or down by some amount t > 0. What will happen to the level of output?
Please don't copy ans Economics You are the owner of a motorbike company that currently has two different factories, an old one and a new one. The old factory uses an old technology that requires large amounts of labor to produce motorbikes. The production technology for the old firm is given by Fo(L) = m*L^1/2 . The new factory uses a much more modern production technology given by Fn(L) = n*L^1/2 . a. What are costs as a function of output for each individual factory? b. Suppose that you want to produce 1000 motorbikes. How many motorbikes will you produce at the old factory and how many will you produce at the new factory? c. Derive an expression for the total cost of producing y motorbikes (assuming that you always divide production between the factories in the optimal way). How does this cost function compare to the individual factory cost functions? d. It turns out that you can upgrade your old factory to make it just as efficient as the new factory. To pay…