Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Communications Consultant Services, Inc., advises small to medium-sized businesses on telephone equipment and network configurations. The primary resources CCS employs are skilled network consultants and

Communications Consultant Services, Inc., advises small to medium-sized businesses on telephone equipment and network configurations. The primary resources CCS employs are skilled network consultants and computers. Currently, CCS employs 16 consultants at a cost of $70 per hour (wage plus fringes and variable overhead), and purchases 160 hours of computer time each week at a time-sharing cost of $280 per hour. Each consultant works a 40-hour week. This level of employment allows CCS to complete 213 communications analyses per week for which the firm receives $300 each.(10 points)

1.1 Assuming that both returns to factors and returns to scale are constant, what are the marginal products for:

(1) Communication consultants and, (2) computer time (up to the full capacity level)?

1.2 Is CCS employing labor and computers in an optimal ratio, assuming that substitution of the resources is possible? Explain.

1.3 Determine the marginal revenue products for consultants and for the computer services employed by CCS. (Assume constant returns to factors in part 1.1)

1.4 Is CCS employing an optimal (profit-maximizing) quantity of labor and computer time? Explain.

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

Step: 3

blur-text-image

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

The Strictures Of Inheritance The Dutch Economy In The Nineteenth Century

Authors: Jan Luiten Van Zanden, Arthur Van Riel, Ian Cressie

1st Edition

0691229309, 9780691229300

More Books

Students also viewed these Economics questions

Question

Was there an interaction of history and treatment effects?

Answered: 1 week ago

Question

4. What means will you use to achieve these values?

Answered: 1 week ago