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Jun wants to go into the donut business. For $500 per month he can rent a bakery complete with all the equipment he needs to
Jun wants to go into the donut business. For $500 per month he can rent a bakery complete with all the equipment he needs to make a dozen different kinds of donuts (K = 1). He must pay donut bakers a monthly salary of $400 each. He projects his production function to be Q = 5KL (where Q is tons of donuts).
(1)What is Jun's monthly total cost function, variable cost function, and marginal cost?
(2) How many bakers will Jun hire to make 25 tons of donuts?
(3)What will happen to Jun's total cost if his production function turns out to be Q = 2KL?
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