Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2. The law of diminishing marginal returns Andrew's Performance Pizza is a small restaurant in Houston that sells gluten-free pizzas. Andrew's very tiny kitchen has

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed
image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed
2. The law of diminishing marginal returns Andrew's Performance Pizza is a small restaurant in Houston that sells gluten-free pizzas. Andrew's very tiny kitchen has barely enough room for the three ovens in which his workers bake the pizzas. Andrew signed a lease obligating him to pay the rent for the three ovens for the next year. Because of this, and because Andrew's kitchen cannot fit more than three ovens, Andrew cannot change the number of ovens he uses in his production of pizzas in the short run. However, Andrew's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Andrew lets them know how many workers he needs for each day of the week. In the short run, these workers are resources, and the ovens are resources. variable Andrew's daily production schedule is presented in the following table. fixed200 A 180 Production Function 180 140 120 100 QUANTITY OF OUTPUT (Pizzas) 80 40 20 2 3 4 0 LABOR HIRED (Number of workers)Suppose that labor is Andrew's only variable cost and that he has a xed Dost of $10 per dayr and pays each of his workers $50 per day. Use the orange points (square symbol) in plot Andrew's total cost curve on the following graph using the quantities from the preceding table. ('3 230 24o Total Cost TOTL COST (Dollars) D an 40 an somomnnowoisozno QUANTITY OF OUTPUT (Pizzas)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Foundations Of Global Financial Markets And Institutions

Authors: Frank J. Fabozzi, Frank J. Jones, Francesco A. Fabozzi, Steven V. Mann

5th Edition

0262039540, 978-0262039543

More Books

Students also viewed these Economics questions

Question

1. Administrative routines, such as taking attendance

Answered: 1 week ago