Companys production method is highly labor-intensive

Assignment Help Business Economics

Reference no: EM13741995

Medfin Accounting Company (MAC) specializes in providing accounting and tax services for medical establishment and professionals. Presently, the company's production method is highly labor-intensive because many of the books keeping tasks are done manually. MAC employs 50 workers (L) paying them each, on average, $50,000 per year. MAC also has 40 computers (K). The company has leased these computers along with their accompanying software packages at $5,000 per year each. Presently the firm provides accounting and tax services to 150 clients. a. Write the equation for the company's isocost. b. At this given mix of inputs ( K = 40, L= 50) the firm's marginal rate of technical substitution (MPL/MPK) is -6. Is this mix of capital and labor that MAC is using efficient (optimal)? Explain as specifically as you can. c. If your answer to (b) is no, what changes should the firm make in its production style? d. Assuming that the firm wants to serve the same number of clients, how would the changes that you might be suggesting would affect the company's revenue, costs, and profit? e. Now starting back from the original mix of computers (capital) and labor -- that is 50 workers and 40 computers --, suppose the company wants to increase the size of its clientele. How would you suggest the company should pursue its expansion plan? What is the most efficient approach to this expansion? Should the company hire more labor and acquire more computers right away? Be as specific as you can.

Reference no: EM13741995

Questions Cloud

What are some of the largest health concerns for population : What does it mean to be healthy. What are some of the largest health concerns for your population. Are there any cultural rituals in health and healing

Discuss how this tac affected the money supply : To increase tax revenue, the US government in 1932 imposed a two-cent tax on checks written on deposits in bank accounts (In today’s dollars, this tax was about 25 cents per checks) Use the model of the money supply under fractional-reserve banking t..

Explain achievement of civil rights of photojournalist : create a PowerPoint presentation of progress made toward the achievement of civil rights of these and other groups in society.

Find the efficient number of lighthouses : There are 2 fishermen, Zach and Jacob, who fish along a certain coast. Both would benefit if lighthouses were built along the coast where they fish. The marginal cost of building each additional lighthouse is $25.

Companys production method is highly labor-intensive : Medfin Accounting Company (MAC) specializes in providing accounting and tax services for medical establishment and professionals. Presently, the company's production method is highly labor-intensive because many of the books keeping tasks are done ma..

Maintain a list of accounts in its central database : The system must maintain the course schedule in its central database including course title, course number, course description, course prerequisites, length of course, course outline, schedule dates, and instructor information - Develop an online ..

Output firm with decreasing return-to-scale technology : Using graph, illustrate the effect of an increase of the input price on the production and profit of a one input-one output firm with decreasing return-to-scale technology?

Experience a relatively high level of unemployment : The U.S. continues to experience a relatively high level of unemployment in its workforce. When analyzing a two-good production possibilities curve (PPC), where would you expect to find a point that reflects this unemployment?

Analyze recent best practices for employee retention : Research and analyze recent best practices for employee retention within the technology industry. Identify methods to assess compensation amounts for multiple positions.

User Account

All Pages