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.

... either by calculating the figure for the units from the production costs in marginal costing profit and loss account or by using the 'sales = cost of sales ...

... Particulars Year 1 Year 2 Variable costing net operating ... Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing 70,000 Less ...

... But fixed costs are to be incurred irrespective of the level of ... It is the variable cost. ... unit of finished goods require 5 kgs of raw material costing $ 1 per kg ...

... run, variable costing may lead to under-pricing. ... c. Inventories are not shown at their full cost of. ... d. Marginal costing is especially useful in short profit. ...

... year, and its variable costs were $9 per unit, of which $1 was variable selling expense. If production cost was $11 per unit under absorption costing, then how ...

... BE18- 12 PCB Corporation has fixed costs of $ 480,000. It has a unit selling price of $ 6, unit variable cost of $ 4.50, and a target net income of $ 1,500,000 ...

... selling and administrative costs. c. fixed manufacturing overhead. It is product cost in absorption costing and period cost in variable costing d. variable ...

... The change in total cost is a change in variable costs. ... Variable costs include direct labor, the cost of materials, and the remaining manufacturing overhead. ...