Suppose that labor is Valerie's only variable cost and that she has a fixed cost of $20 per day and pays each of her workers $30 per day.Use the orange points (square symbol) to plot Valerie's total cost curve on the following graph using the quantities from the preceding table.200180Total Cost16014012010080604040 6080100120140160180200QUANTITY OF OUTPUT (Pizzas)True or False: The shape of the production function reflects the law of increasing marginal returns.O TrueO False2020TOTAL COST (Dollars) 2. Inputs and outputsValerie's Performance Pizza is a small restaurant in Detroit that sells gluten-free pizzas. Valerie's very tiny kitchen has barely enough room for thethree ovens in which her workers bake the pizzas. Valerie signed a lease obligating her to pay the rent for the three ovens for the next year. Becauseof this, and because Valerie's kitchen cannot fit more than three ovens, Valerie cannot change the number of ovens she uses in her production ofpizzas in the short run.However, Valerie's decision regarding how many workers to use can vary from week to week because her workers tend to be students. Each Monday,Valerie lets them know how many workers she needs for each day of the week. In the short run, these workers arev inputs, and theovens areinputs.Valerie's daily production schedule is presented in the following table.Fill in the blanks to complete the Marginal Product of Labor column for each worker.Output(Pizzas)LaborMarginal Product of Labor(Pizzas)(Number of workers)6021001304150160On the following graph, plot Valerie's production function using the green points (triangle symbol).Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.Hint: Be sure to plot the first point at (0, 0).200180Production Function160140120100LABOR (Number of workers)MAA1.QUANTITY OF OUTPUT (Pizzas)

Valerie's performance pizza is a small restaurant that sells pizzas. He owns three ovens in which…

Suppose that labor is Valerie's önly Varlable cost and that SHe Has Use the orange points (square symbol) to plot Valerie's total cost curve on the following graph using the quantities from the preceding table 200 180 Total Cost 160 140 120 100 80 60 40 20 20 40 60 80 100 120 140 160 180 200 QUANTITY OF OUTPUT (Pizzas) True or False: The shape of the production function reflects the law of increasing marginal returns. O True O False TOTAL COST (Dollars) O O

Suppose that labor is Valerie's önly Varlable cost and that SHe Has Use the orange points (square symbol) to plot Valerie's total cost curve on the following graph using the quantities from the preceding table 200 180 Total Cost 160 140 120 100 80 60 40 20 20 40 60 80 100 120 140 160 180 200 QUANTITY OF OUTPUT (Pizzas) True or False: The shape of the production function reflects the law of increasing marginal returns. O True O False TOTAL COST (Dollars) O O

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 42P: A small company that shovels sidewalks and driveways has 100 homes signed up for its services this...

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A small company that shovels sidewalks and driveways has 100 homes signed up for its services this winter. It can use various combinations of capital and labor: intensive labor with hand shovels, less labor with snow blowers, and still less labor with a pickup truck that has a snowplow on front. To summarize, the method Choices are: Method 1: 50 units of labor, 10 units of capital Method 2: 20 units of labor, 40 units of capital Method 3: 10 units of labor, 70 units of capital If hiring labor for the winter costs $100/unit and a unit of capital costs 400, what is the best production method? What method should the company use if the cost of labor rises to $20/unit?
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2. Inputs and outputs Dmitri's Performance Pizza is a small restaurant in Philadelphia that sells gluten-free pizzas. Dmitri's very tiny kitchen has barely enough room for the four ovens in which his workers bake the pizzas. Dmitri signed a lease obligating him to pay the rent for the four ovens for the next year. Because of this, and because Dmitri's kitchen cannot fit more than four ovens, Dmitri cannot change the number of ovens he uses in his production of pizzas in the short run.
2. Inputs and outputs Edison's Performance Pizza is a small restaurant in Philadelphia that sells gluten-free pizzas. Edison's very tiny kitchen has barely enough room for the three ovens in which his workers bake the pizzas. Edison signed a lease obligating him to pay the rent for the three ovens for the next year. Because of this, and because Edison's kitchen cannot fit more than three ovens, Edison cannot change the number of ovens he uses in his production of pizzas in the short run. However, Edison's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Edison lets them know how many workers he needs for each day of the week. In the short run, these workers are inputs, and the ovens are inputs. Edison's daily production schedule is presented in the following table. Fill in the blanks to complete the Marginal Product of Labor column for each worker. Labor Output Marginal Product…
Suppose Nicholas owns a business making Christmas tree ornaments. Currently, he makes 300 ornaments a month. At this level of production, each additional ornament takes him 30 minutes to make and costs him $5 in materials. Nicholas makes his ornaments in a small studio that he rents for $300 a month. Nicholas can easily increase or decrease the amount of time he spends making ornaments, and he can easily go to the store to buy additional materials to make the ornaments, but he has a year-long lease on his studio, so he has to pay his monthly rent no matter how many ornaments he produces each month. Nicholas values his time at $10 per hour. Other than his time, the cost of the materials and the rent on his studio, Nicholas has no additional production costs. a At Nicholas's current level of production, what is the marginal cost of making an additional ornament each month? b. At Nicholas's current level of production, what is the monthly average fixed cost of each ornament? c. Assuming…
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