Fix potholes in interstate highways

Reference no: EM13914287

Mad Max's Road Warriors fix potholes in interstate highways. Max's road crews fill potholes using workers and shovels in 1-to-1 correspondence. A worker with 1 shovel can fill 10 potholes in a day. A worker with 2 shovels can still only fill 10 potholes, as can 2 workers with 1 shovel.

(a) Draw the isoquant corresponding to filling 30 potholes.

(b) Assume that production displays constant returns to scale and draw a few more isoquants.

(d) If Mad Max has received a state contract to fill 30 potholes, what is the minimum cost at which it can fulfill the contract?

(e) If the cost of renting a shovel suddenly rises to $6, what will happen to the composition of inputs that Mad Max uses to fill potholes? Why?

Reference no: EM13914287

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