I. - Professor Smith and Professor Jones are going to produce a new introductory textbook. Production Function : q = (SJ)1/2
Q = number of pages in finished book
S = number of working hours spent by Spent
J = number of working hours spent by Jones

Smith values labor at $20 per working hour, she spent 900 hours providing the first draft. Jones, labor valued at $80 per working hour will revise Smith's draft.

(a) How many hours will Jones have to spend to produce a finished book of 150 pages? Of 300 pages? Of 450 pages?

(b) What is the marginal cost of the 150th page of the finished book? Of the 300th Page? Of the 450th page?

ii. - Suppose a firm's constant-return-to-scale production function requires it to use capital and labor in a fixed ratio of two workers per machine to produce 10 units and that the rental rates for capital and labor are given by v = 1 and w = 3.

a. Calculate the firm's long-run total and average costs curves.

b. Suppose K is fixed at 10 in the short run. Calculate the firm's short-run total and average cost curves. What is the marginal cost of the 10th, 25th, 50th, and 100th unit?

i.(a) How many hours will Jones have to spend to produce a finished book of 150 pages? Of 300 pages? Of 450 pages?
<br>
<br>Since S=900, from q = (900J)^0.5 = 30 J^0.5
<br>We can write J = (q/30)^2
<br>
<br>Then when q=150, J =(150/30)^2 = 25
<br>
<br>Then when q=300, J =(300/30)^2 = 100
<br>
<br>Then when q=450, J =(450/30)^2 = 225
<br>
<br>
<br>(b) What is the ...

Solution Summary

Calculate the firm's short-run total and average cost curves.

... 4. Fixed costs (FC) are costs that do not vary with the quantity of output produced. Marginal cost (MC) = change in total cost / change in quantity, and slope ...

... exceeds production in June) ($30,000) Note: (1) Absorption costing treats all ... It is also termed as full cost method. (2) In variable or marginal cost method we ...

Output, Profit, Fixed Costs and Perfect Competition. ... Assume that the firm's short-run total cost and marginal cost surves have been estimated to be. ...

... total amount of variable cost & fixed cost doesn't change (only their shares changes), the firm's profit doesn't change either. 2) When fixed costs are lower ...

...cost = TVC/Q = 12/24 = 0.5 <br> <br>c. What is the firm's fixed costs? <br> <br>ANSWER: The firm's Total Cost (STC)= The Total Variable Cost + The Total Fixed ...

... Fixed costs: Fixed manufacturing overhead $146,300 Fixed selling and administrative $60,000. What is the unit product cost for the month under variable costing? ...