Production and costs , Business Management

A bottling company uses two inputs to assemble bottles of the soft drink Squish: bottling machines and workers. Running the bottling machine is an imperfect substitute for the labor performed by the workers. The production function is: 

  q = 100 K1/4 L½

The implicit rental rate plus hourly operating cost of the machine is r = $15 per hour; and the workers each earn w = $20 per hour.   

The current level of input use for the production of q=1000 bottles is:

 K=16 machine hours and L=25 labor hours.

 Question: Is this firm producing at minimum cost?  If it is minimizing costs, explain why.  If it is not minimizing costs, explain how the firm should change its input use to lower its costs.

For full credit, you must discuss the two efficiency conditions for minimizing cost.  That is:

  Is the bundle technologically efficient?  (yes/no/why or why not)

  Is it economically efficient?  (yes/no/why or why not)

Posted Date: 3/13/2013 3:45:08 AM | Location : United States







Related Discussions:- Production and costs , Assignment Help, Ask Question on Production and costs , Get Answer, Expert's Help, Production and costs Discussions

Write discussion on Production and costs
Your posts are moderated
Related Questions
Discuss how the four major conceptual blocks apply in today''s firm settings. Specifically, discuss how these four major concepts can be applied to your personal experience in a pr

What are the objectives of the trade unions? The Objectives of trade unions are illustrated below: a. To take labour out of the competitive procedure; because when a number

A decision must be made by managers and human resource departments concerning the quantity of labour required before recruitment or layoffs will occur. What factors will impact on

Explain the factors that affect the choice of distribution channel that a company uses. describe the functions of wholesalers in the distribution chain

QUESTION It is widely assumed that optimists have qualities that pessimists should try to acquire. The importance of "the power of positive thinking" is often being stressed. H

QUESTION Red-tapism is one of the important phenomena which gives a bad name to bureaucracy and brings disrepute to the public sector (i) Explain the term red-tape relating

Suppose you are investigating selling prices of properties. You have obtained summary measures for a random sample of 500 properties. The mean selling price was $520,000 while the

concepts of segmentation

QUESTION Part A (a) Elaborate on the Communication Process Model and explain successively through the use of this model the various stages that can ensure effective business

QUESTION 1 (a) Explain the following terms as used in E-business: (i) Vortal (ii) Countermediation (iii) e-Auction (iv) Cookie (v) B2B e-business model (b) Wi