Smartphones include a variety of components that can be produced in-house by the phone manufacturer or outsourced to another producer ar purchased as an intermediate good. Suppose that Orange, a smartphone manufacturer, faces varying prices for producing components in-hous buying them. V 5th attempt Part 1 You are hired as a consultant by Orange to review its costs and input choices. Let x1 represent purchased inputs and x2 represent inputs produced in-house, and let p₁ and p2 be the cost of each to Orange. Orange provides the following information: 1. When the price of purchased inputs was $14 and the price of in-house inputs was $14, Orange purchased 4 inputs and used 8 in- house inputs for every smartphone produced. 2. When the price of purchased inputs was $56 and the price of in-house inputs was $14, Orange purchased 1 input and used 12 in- house inputs for every smartphone produced. 3. When the price of purchased inputs was $14 and the price of in-house inputs was $28, Orange purchased 6 inputs and used 5 in- house inputs for every smartphone produced. On the graph below, use the point tool to plot the three input combinations given and label them 1, 2, and 3, respectively. Then use the line tool to draw isocost lines through each point based on the prices associated with each choice of inputs.
Smartphones include a variety of components that can be produced in-house by the phone manufacturer or outsourced to another producer ar purchased as an intermediate good. Suppose that Orange, a smartphone manufacturer, faces varying prices for producing components in-hous buying them. V 5th attempt Part 1 You are hired as a consultant by Orange to review its costs and input choices. Let x1 represent purchased inputs and x2 represent inputs produced in-house, and let p₁ and p2 be the cost of each to Orange. Orange provides the following information: 1. When the price of purchased inputs was $14 and the price of in-house inputs was $14, Orange purchased 4 inputs and used 8 in- house inputs for every smartphone produced. 2. When the price of purchased inputs was $56 and the price of in-house inputs was $14, Orange purchased 1 input and used 12 in- house inputs for every smartphone produced. 3. When the price of purchased inputs was $14 and the price of in-house inputs was $28, Orange purchased 6 inputs and used 5 in- house inputs for every smartphone produced. On the graph below, use the point tool to plot the three input combinations given and label them 1, 2, and 3, respectively. Then use the line tool to draw isocost lines through each point based on the prices associated with each choice of inputs.
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ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter7: Proudction Costs
Section: Chapter Questions
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Transcribed Image Text:Smartphones include a variety of components that can be produced in-house by the phone manufacturer or outsourced to another producer ar
purchased as an intermediate good. Suppose that Orange, a smartphone manufacturer, faces varying prices for producing components in-hous
buying them.
V
5th attempt
Part 1
You are hired as a consultant by Orange to review its costs and input choices. Let x1 represent purchased inputs and x2 represent
inputs produced in-house, and let p₁ and p2 be the cost of each to Orange. Orange provides the following information:
1. When the price of purchased inputs was $14 and the price of in-house inputs was $14, Orange purchased 4 inputs and used 8 in-
house inputs for every smartphone produced.
2. When the price of purchased inputs was $56 and the price of in-house inputs was $14, Orange purchased 1 input and used 12 in-
house inputs for every smartphone produced.
3. When the price of purchased inputs was $14 and the price of in-house inputs was $28, Orange purchased 6 inputs and used 5 in-
house inputs for every smartphone produced.
On the graph below, use the point tool to plot the three input combinations given and label them 1, 2, and 3, respectively. Then use the
line tool to draw isocost lines through each point based on the prices associated with each choice of inputs.
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