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

What is labour turnover, What is Labour Turnover? Labour Turnover: ...

What is Labour Turnover? Labour Turnover: Labour turnover considers as the movement of workers within and out of an organisation. This may be described as the time-to tim

Explain engineering business functions, Identify and explain engineering bu...

Identify and explain engineering business functions. Draw out an organisation chart for an organisation of your choice and explain the roles and functions of an engineering bus

Explain the elements of the negotiation process, Question 1: Explain br...

Question 1: Explain briefly the seven elements of the negotiation process known as the Seven Pillars of the Negotiational Wisdom which need to be considered before and durin

How is the consideration of objectives affected, How is the consideration o...

How is the consideration of objectives affected? Consideration of objectives: As the objectives have a significant bearing onto the organization structure, merely those o

Ahsford university, Knowing your Learning Patterns is important primarily b...

Knowing your Learning Patterns is important primarily because (Points : 1)

Describe the organizations culture, Think of an organization with which you...

Think of an organization with which you are familiar, perhaps one you have worked for or where you were a member. Then answer the following questions. 1) Using the jobs characte

Advantages of functional structure, Organisations tend to organise their wo...

Organisations tend to organise their working areas by function, e.g. production, warehouse, sales and marketing, etc.  Business processes occur across these functional groups requi

Define the scope of total quality management in brief, Define the scope of ...

Define the scope of total quality management in brief. Scope of TQM: Total Quality Management is a system approach to quality within all spheres of organisation. It impli

What types of information systems serve each level, QUESTION 1. The Uni...

QUESTION 1. The University of Technology set up in year 2000 in Mauritius operates three schools around twenty different programmes at Certificates, Diploma and Post-Graduate l

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