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Question 1 Consider the production of Good X. Good X is produced using only labor, which can be supplied by either men or women, with the production function given by X=f(M,W)=M+W. Men and women are...

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Question 1

  1. Consider the production of Good X. Good X is produced using only labor, which can be supplied by either men or women, with the production function given by X=f(M,W)=M+W. Men and women are perfect substitutes for each other. Suppose the wage men earn is $15/hour and the wage women earn is $13/hour. What is the cost function that producers face in this scenario?Answer
    C(X)=28*X
    C(X)=X/28
    C(X)=13*X
    C(X)=15*X

10 points

Question 2

  1. Now consider the production of babies. Unlike manufacturing Good X, in this case, men and women are complements. The production function for babies is given by B=f(M,W)=min(M,W). In this case, the wage for men in the baby-making industry is $75, and the wage for women is $30,000. What is the cost function in this case?Answer
    C(B)=B/30075
    C(B)=75*B
    C(B)=30000*B
    C(B)=30075*B

10 points

Question 3

  1. Consider the Simpsons t-shirt industry. To manufacture t-shirts requires an initial investment (fixed cost) of $6,400 in a factory. The variable costs are given by VC=T+(1/16)T^2, and the marginal cost is given by 1+T/8. What is the minimum average cost these shirts can be produced for?Answer

10 points

Question 4

  1. Again consider the Simpsons t-shirt industry. To manufacture t-shirts requires an initial investment (fixed cost) of $6,400 in a factory. The variable costs are given by VC=T+(1/16)T^2, and the marginal cost is given by 1+T/8. What quantity of t-shirts will result in the average cost of production being minimized?Answer
Answered Same Day Dec 23, 2021

Solution

David answered on Dec 23 2021
122 Votes
Question 1 Consider the production of Good X. Good X is produced using only labor, which can be supplied by either men or women, with the production function given by X=f(M,W)=M+W. Men and women are perfect substitutes for each other. Suppose the wage men earn is $15/hour and the wage women earn is $13/hour. What is the cost function that producers face in this scenario? Answer C(X)=28*X C(X)=X/28 C(X)=13*X C(X)=15*X 10 points Question 2 Now consider the production of babies. Unlike manufacturing Good X, in this case, men and women are complements. The production function for babies is given by B=f(M,W)=min(M,W). In this case, the wage for men in the baby-making...
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