Consider a production process where flowers are grown (the output) using gardeners (labor) and greenhouses (capital). The quantity of flowers grown per day with various combinations of labor and capital are shown in the table below. Suppose that each gardener is paid $200 per day and the greenhouse is rented for $500 per day. Fill in total cost in the table below. (Enter your responses as integers.) Labor Capital Output Total Cost
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A: q= 4k0.5 L0.5 PL = 5 PK = 20 q=200
Labor
|
Capital
|
Output
|
Total Cost
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0
|
1
|
0
|
$
|
1
|
1
|
160
|
|
2
|
1
|
480
|
|
3
|
1
|
640
|
|
4
|
1
|
720
|
|
5
|
1
|
760
|
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- Suppose honey is produced in a beehive using bees and sugar. Each honey producer uses one beehive which she rents for $20/month. Producing q gallons of honey in one month requires spending 5q dollars bees, and 4q2 dollars on sugar. (a) What is the total cost of producing q units of honey for an individual honey producer in a given month? (b) In general, if the total cost of producing honey is a + bq + cq2, then the marginal cost of producing honey is b + 2cq. Assuming each honey producer operates as a price-taker, what is the monthly supply curve for an individual producer? (c) Let Q be the total market supply, and q is the supply of an individual firm. Therefore, q = Q/n where n is the total number of firms in the market. Suppose the demand for honey is given by Q = 512-4P. Also, suppose there are 50 honey producers in the market. What is the equilibrium price of honey? (d) How much profit does an individual producer make in a month? Is this a long-run equilibrium? If the…Sam Malone is considering renovating the bar stools at Cheers.The production function for new bar stools is given byq = 0.1k 0.2l0.8 where q is the number of bar stools produced during the renovation week, k represents the number of hours of bar stoollathes used during the week, and l represents the number ofworker hours employed during the period. Sam would like toprovide 10 new bar stools, and he has allocated a budget of$10,000 for the project.a. Sam reasons that because bar stool lathes and skilled barstool workers both cost the same amount ($50 per hour),he might as well hire these two inputs in equal amounts.If Sam proceeds in this way, how much of each input willhe hire and how much will the renovation project cost?b. Norm (who knows something about bar stools) arguesthat once again Sam has forgotten his microeconomics.He asserts that Sam should choose quantities of inputs sothat their marginal (not average) productivities are equal.If Sam opts for this plan instead, how much of…The marginal cost of producing the xth box of lightbulbs is 4+x^2/1,000 dollars per box. Determine how much is added to the total cost by a change in production from x=30 to x=90 boxes. 
- Consider the following two systems of production, which produce the same quantity. A (assemble by hand) requires: 35 workers 1 robot B (assemble by robot) requires: 5 workers 4 robots Price of one unit of inputs (thousands): worker: £2 robot: £50 Draw the axes of a cost diagram as follows: · units of labour on the x-axis, with a scale from 0 to 70 · units of capital on the y-axis, with a scale from 0 to 5. Now mark system A and system B as points on this diagram. Draw an isocost line at C = £120. Comment on which system you would choose, and why.The production engineers at Impact Industries have derived the optimal combinations of labor and capital. These are the only two inputs used by Impact. The following chart shows the combinations of labor and capital for three levels of output. Q is the output level. L* is the optimal amount of labor. K* is the optimal amount of capital. The price of labor is $90 per unit. The price of capital is $15 per unit. Q L* K* 120 5 20 180 7 7 240 12 24 a) If the manager of Impact Industries decides to produce 120 units, what will the long-run total cost and long-run average cost of producing 120 units? Show all calculations. b) If the manager of Impact Industries decides to produce 180 units, what will the long-run total cost and long-run average cost of producing 180 units? Show all calculations. c) If the manager of Impact Industries decides to produce 240 units, what will the long-run total cost and long-run average cost of producing 240…The production engineers at Impact Industries have derived the optimal combinations of labor and capital. These are the only two inputs used by Impact. The following chart shows the combinations of labor and capital for three levels of output. Q is the output level. L* is the optimal amount of labor. K* is the optimal amount of capital. The price of labor is $90 per unit. The price of capital is $15 per unit. Q L* K* 120 5 20 180 7 7 240 12 24 a) If the manager of Impact Industries decides to produce 120 units, what will the long-run total cost and long-run average cost of producing 120 units? Show all calculations. b) If the manager of Impact Industries decides to produce 180 units, what will the long-run total cost and long-run average cost of producing 180 units? Show all calculations. c) If the manager of Impact Industries decides to produce 240 units, what will the long-run total cost and long-run average cost of producing 240…
- The production engineers at Impact Industries have derived the optimal combinations of labor and capital. These are the only two inputs used by Impact. The following chart shows the combinations of labor and capital for three levels of output. Q is the output level. L* is the optimal amount of labor. K* is the optimal amount of capital. The price of labor is $90 per unit. The price of capital is $15 per unit. Q L* K* 120 5 20 180 7 7 240 12 24 a) If the manager of Impact Industries decides to produce 120 units, what will the long-run total cost and long-run average cost of producing 120 units? Show all calculations. b) If the manager of Impact Industries decides to produce 180 units, what will the long-run total cost and long-run average cost of producing 180 units? Show all calculations.A firm requires labor and capital to produce a given output. Labor costs $8 per hour and capital costs $12 per hour. At the current level of output, the marginal product of labor is 48 and the marginal product of capital is 60. To minimize production costs, in which way should the firm allocate its resources?We R' Write is really worried about their production line for pens. The company is concerned that they are employing more workers on the production line than necessary. We R' Write has provided you with the production information for pens in the table below that corresponds to different numbers of workers on the production line. Describe where the law of diminishing marginal productivity begins for We R' Write. We R' Write currently uses 75 workers on the production line per day. Given the calculations in the table, is this number optimal? Why, or why not? If you could make a suggestion regarding the optimal number of workers We R' Write should use on the production line, what would it be? Why? Number of Workers per Day Pens Produced per Day Average Product Marginal Product Price per Pen Total Value Product Average Value Product Marginal Value Product Price of Worker per Day 0 0 --- --- $3.50 $0.00 --- --- $560 15 1,000 66.67…
- Illustrate the link between the cost-minimization problem and total cost curve. What would happen to the total cost curve if the firm increases level of output?Suppose a hugely successful Web company has used freeconomics, expanded its scale of operations, and spread its long-run costs over larger and larger audiences. However, after years of profits, its continued growth has now caused the company’s profits to fall. Using production costs theory, explain why this situation might be occurring.A firm’s technology (recipe for combining factors of production) has an impact on its costs. Given a firm has a technology Q(L,K) = L0.8K0.2 (Where L represents labour and K represents Capital), which of the following is/are necessarily true? A firm’s technology (recipe for combining factors of production) has an impact on its costs. Given a firm has a technology Q(L,K) = L0.8K0.2 (Where L represents labour and K represents Capital), which of the following is/are necessarily true? Costs are exponentially increasing (by an exponent of 0.6) The elasticity of substitution between the factors is σ=1 The firm will spend equal amounts on the Labour and Capital factors Returns to scale are decreasing Optimum amounts of inputs for a given output is found by the interaction of cost functions and technology