Objective: Find optimal L, Q, and profits for every change in market conditions. •Case 1: Economists calculated that Amazon’s productivity function in 2000 was: Q=40K^0.55 L^0.45 . Also, average price per unit (mostly books) = $22, wage per unit = $8, and at that time, Amazon had one distribution center (K) at $10,000 (including renting rate, inventory costs, etc.) Case 2: In 2005, Amazon expanded its distribution centers to 5. Case 3: In 2012, Amazon bought robot maker Kiva System, changing Amazon’s productivity function to: Q=80K^0.55 L^0.45 , keeping the rest of the information as in Case 2. Case 4: In 2019, Amazon announced hourly wage of $15 per unit. Compare optimal number of workers, Q, and profits under these corporate and market changes (Table)
Objective: Find optimal L, Q, and profits for every change in market conditions. •Case 1: Economists calculated that Amazon’s productivity function in 2000 was: Q=40K^0.55 L^0.45 . Also, average price per unit (mostly books) = $22, wage per unit = $8, and at that time, Amazon had one distribution center (K) at $10,000 (including renting rate, inventory costs, etc.) Case 2: In 2005, Amazon expanded its distribution centers to 5. Case 3: In 2012, Amazon bought robot maker Kiva System, changing Amazon’s productivity function to: Q=80K^0.55 L^0.45 , keeping the rest of the information as in Case 2. Case 4: In 2019, Amazon announced hourly wage of $15 per unit. Compare optimal number of workers, Q, and profits under these corporate and market changes (Table)
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter25: The Supply Of And Demand For Productive Resources
Section: Chapter Questions
Problem 3CQ
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Objective: Find optimal L, Q, and profits for every change in market conditions.
•Case 1: Economists calculated that Amazon’s productivity function in 2000 was: Q=40K^0.55 L^0.45 . Also, average price per unit (mostly books) = $22, wage per unit = $8, and at that time, Amazon had one distribution center (K) at $10,000 (including renting rate, inventory costs, etc.)
Case 2: In 2005, Amazon expanded its distribution centers to 5.
Case 3: In 2012, Amazon bought robot maker Kiva System, changing Amazon’s productivity function to: Q=80K^0.55 L^0.45 , keeping the rest of the information as in Case 2.
Case 4: In 2019, Amazon announced hourly wage of $15 per unit.
Compare optimal number of workers, Q, and profits under these corporate and market changes (Table).
Case1:
L1 =
Q1 =
Profits1 =
Case2:
L2 =
Q2 =
Profits2 =
Case3:
L3 =
Q3 =
Profits3 =
Case4:
L4 =
Q4 =
Profits4 =
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