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

Different types of change that an organization may face, QUESTION (a) O...

QUESTION (a) Organisations are systems that exist in the context of an external environment, an interdependent relationship, interact with it in order to survive and grow. Any

Discuss what is meant by power in organisations, Question 1: (a) Define...

Question 1: (a) Define and discuss what is meant by "Power" in organisations? (b) Explain the main sources of inter-personal power in organisations giving examples of each s

What is morale in terms of measurement, What is Morale in terms of measurem...

What is Morale in terms of measurement? Morale: Morale is level like either high or low or a measure of extent of voluntary cooperation illustrated by an individual or a

What you understand by the term "cost insurance freight", QUESTION 1 (a...

QUESTION 1 (a) Mr. Gentil, a Mauritian textile exporter, is proposing to enter into an international sales contract with a French importer, to sell his textile products. Advise

What do you understand by selection, Question 1: "Training is more an i...

Question 1: "Training is more an investment than cost". Discuss. Question 2: (i) What do you understand by "selection"? (ii) Comment on the effectiveness of inter

Explain the vision of an entrepreneur, Explain the Vision of an Entrepreneu...

Explain the Vision of an Entrepreneur. Vision: An entrepreneur has visualizes the methods and means to get dream. In doing the same he visualizes, that: Market Demands, Soic

Production problem, Problem 1 (a) Explain what is done during the subse...

Problem 1 (a) Explain what is done during the subsequent audiovisual production phases: (i) Pre-production (ii) Production (iii) Post-Production (b) Mention one prod

Discuss and analyze environmental protection programs, A clean environment ...

A clean environment is a basic component of quality service and is thus important for the development of travel, tourism and hotel industries. The sustainable prosperity of travel,

Humanistic aspects of tq, The human element is the most important input i...

The human element is the most important input in any industrial enterprise and it is the one which is most difficult to control. Quality Management is essentially a control

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