Production and costs , Business Management

Assignment Help:

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)


Related Discussions:- Production and costs

Structure of a maintenance organization, The maintenance department is pri...

The maintenance department is primarily a service department and as such is a part of the plants staff. Generally the maintenance department is attached to the production func

.transaction cost analysis (TCA)., transaction cost analysis (TCA). What ro...

transaction cost analysis (TCA). What role does TCA play in the decision to use a company sales force rather than independent manufacturers'' agents?

Meaning of hyper-competitive strategies, Explain Which of the following exp...

Explain Which of the following explanations best defines the meaning of hyper-competitive strategies? Ans) ? A) Hyper-competitive methods are about how to compete in fast changi

Differences between a functionalist and interpretivist, QUESTION 1 (a) ...

QUESTION 1 (a) Discuss the role of each of the three closely related patterns of group communication (cohesiveness, conformity and deviance) in groupthink. (b) Briefly descr

Implement conditional formatting, a) Implement conditional formatting to sh...

a) Implement conditional formatting to show that if the total spent before VAT is £1000 or more, the cell will be highlighted in red to show that discount has been earned. b) In

#title: Sole proprietorship, What are the features, advantages and disadvan...

What are the features, advantages and disadvantages of sole proprietorship

Leadership, Leadership: In the 21 Indisputable Legislation of Leadersh...

Leadership: In the 21 Indisputable Legislation of Leadership, John Maxwell sums up his interpretation of leadership as "leadership is sway - nothing extra, nothing fewer." Thi

What are functions are included for the industrial manager, What are functi...

What are functions are included for the Industrial Manager? The Industrial Manager is included in the illustrated functions as follows: a.    design products which will find a

Frauds of the century: the case of bernard madoff, what were the ethical is...

what were the ethical issues involved in the madoff case?

Non tariff measures, The last 30 years has witnessed substantial reduction ...

The last 30 years has witnessed substantial reduction in the level of tariffs applicable by nations members to the WTO. However, this has also been accompagnied by a rapid prolifer

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd