Baker premium is a company producing buns in a rented factory with the rental cost of $100 per day. The wage per worker is $40 per day. The table below shows the daily amount of buns produced with a different number of workers employed in the factory Workers Buns 1 30 70 130 4 210 260 300 7 320 8 330 (a) Compute and explain the minimum price per bun for Baker Premium to operate in the short-run and in the long-run (b) If the price per bun is $1.50, determine the optimal output and compute the daily profit or loss incurred by Baker Premium. Explain why this ouput is optimal (c) Consider the utility company in a city which is the only licensed water supplier in the city. The demand for water is given by P = 10 - 0.006Q and the marginal cost of the company is given by MC = 2 + 0.004Q. Identify the optimal output, the market price, the consumer surplus, the producer surplus and the deadweight loss in the water market. 3.

Baker premium is a company producing buns in a rented factory with the rental cost of $100 per day. The wage per worker is $40 per day. The table below shows the daily amount of buns produced with a different number of workers employed in the factory Workers Buns 1 30 70 130 4 210 260 300 7 320 8 330 (a) Compute and explain the minimum price per bun for Baker Premium to operate in the short-run and in the long-run (b) If the price per bun is $1.50, determine the optimal output and compute the daily profit or loss incurred by Baker Premium. Explain why this ouput is optimal (c) Consider the utility company in a city which is the only licensed water supplier in the city. The demand for water is given by P = 10 - 0.006Q and the marginal cost of the company is given by MC = 2 + 0.004Q. Identify the optimal output, the market price, the consumer surplus, the producer surplus and the deadweight loss in the water market. 3.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter11: The Firm: Production And Costs

Section: Chapter Questions

Problem 15P

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