5) Sarah's Pretzel plant has the following short-run cost function: C(g, K)wg3+ 50K where q is Sarah's%3D3/21000Koutput level, w is the cost of a labor hour, and K is the number of pretzel machines Sarah leases. Sarah'sZwq2short-run marginal cost curve is Mc(g, K) =1000KAt the moment, Sarah leases 10 pretzel machines, the3/2cost of a labor hour is $6.85, and she can sell all the output she produces at $35 per unit. If the cost per laborhour rises to $7.50, what happens to Sarah's optimal level of output and profits?

Cost refers to the amount the is incurred for using factors of production to produce goods. Profit…

5) Sarah's Pretzel plant has the following short-run cost function: Cg, K) wg3 + 50K where q is Sarah's 312 1000K output level, w is the cost of a labor hour, and K is the number of pretzel machines Sarah leases. Sarah's short-run marginal cost curve is MCq, K) = -Swg At the moment, Sarah leases 10 pretzel machines, the 1000K/2 cost of a labor hour is $6.85, and she can sell all the output she produces at $35 per unit. If the cost per labor hour rises to $7.50, what happens to Sarah's optimal level of output and profits?

5) Sarah's Pretzel plant has the following short-run cost function: Cg, K) wg3 + 50K where q is Sarah's 312 1000K output level, w is the cost of a labor hour, and K is the number of pretzel machines Sarah leases. Sarah's short-run marginal cost curve is MCq, K) = -Swg At the moment, Sarah leases 10 pretzel machines, the 1000K/2 cost of a labor hour is $6.85, and she can sell all the output she produces at $35 per unit. If the cost per labor hour rises to $7.50, what happens to Sarah's optimal level of output and profits?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 33CTQ: Average cost curves (except for avenge fixed cost) tend to be U-shaped, decreasing and then...

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