Reference no: EM131408810
Assignment: Production Cost Analysis and Estimation Applied Problems
Please complete the following two applied problems:
Problem 1:
William is the owner of a small pizza shop and is thinking of increasing products and lowering costs. William's pizza shop owns four ovens and the cost of the four ovens is $1,000. Each worker is paid $500 per week.
Workers employed
|
Qty of pizzas produced per week
|
0 1 2 3 4 5 6 7 8
|
0 75 180 360 600 900 1140 1260 1360
|
Show all of your calculations and processes. Describe your answer for each question in complete sentences, whenever it is necessary.
1. Which inputs are fixed and which are variable in the production function of William's pizza shop? Over what ranges do there appear to be increasing, constant, and/or diminishing returns to the number of workers employed?
2. What number of workers appears to be most efficient in terms of pizza product per worker?
3. What number of workers appears to minimize the marginal cost of pizza production assuming that each pizza worker is paid $500 per week?
4. Why would marginal productivity decline when you hire more workers in the short run after a certain level?
5. How would expanding the business affect the economies of scale? When would you have constant returns to scale or diseconomies of scale? Describe your answer.
Problem 2:
The Paradise Shoes Company has estimated its weekly TVC function from data collected over the past several months, as TVC = 3450 + 20Q + 0.008Q2 where TVC represents the total variable cost and Q represents pairs of shoes produced per week. And its demand equation is Q = 4100 - 25P. The company is currently producing 1,000 pairs of shoes weekly and is considering expanding its output to 1,200 pairs of shoes weekly. To do this, it will have to lease another shoe-making machine ($2,000 per week fixed payment until the lease period ends).
Show all of your calculations and processes. Describe your answer for each item below in complete sentences, whenever it is necessary.
1. Describe and derive an expression for the marginal cost (MC) curve.
2. Describe and estimate the incremental costs of the extra 200 pairs per week (from 1,000 pairs to 1,200 pairs of shoes).
3. What are the profit-maximizing price and output levels for Paradise Shoes? Describe and calculate the profit-maximizing price and output.
4. Discuss whether or not Paradise Shoes should expand its output further beyond 1,200 pairs per week. State all assumptions and qualifications that underlie your recommendation.
Evaluate the current pay structure used by your company
: Evaluate the existing compensation plan to determine if it is the most appropriate for your company. Explain your rationale.Determine the most beneficial ratio of internally consistent and market consistent compensations systems for the company you..
|
Translation and cell function control
: Translation and cell function control, both direct and indirect, start with the cell nucleus. Describe and explain the steps involved in translation and give an example of Direct and indirect cellular control by the nucleus.
|
What is the evidence for the ferroelectric state
: Discuss possible reasons why lower permittivity values are found for BaTiO3 in thin film form even when the grain size is the same as that in bulk ceramic form.
|
Travel faster in celery submerged in water
: 1. Would water travel faster in celery submerged in water, or on a piece which was air-dried for 15 minutes? 2. In which celery stalk would the water column get broken?
|
What number of workers appears to minimize the marginal cost
: What number of workers appears to minimize the marginal cost of pizza production assuming that each pizza worker is paid $500 per week?
|
Estimate the steady state difference in temperatures
: If the substrate is bonded to a metallic heat sink, estimate the steady state difference in temperatures between the surface carrying the device and the heat sink
|
Evolution of disease-humans and animals
: In your own words explain the concept of rRNA then suggest three (3) reasons why scientists choose to use rRNA as an Evolutionary Chronometer.
|
Use of an energy consumptive process
: To remove a potential toxin from the body requires the use of an energy consumptive process. At the cellular level this process relies on the following steps:
|
What does compensation mean to you as an employee
: Take a moment to think about compensation. What does compensation mean to you as an employee? Talk to your colleagues at your workplace. What do they think about compensation - and how well they are believe they are compensated. Are there issues? ..
|