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Problem 1 7 Use of Inputs: The table to the right represents the production function for Che Bella, a small catering company specializing in pasta
Problem 1 7 Use of Inputs: The table to the right represents the production function for Che Bella, a small catering company specializing in pasta and pizza. The numbers in the cells represent the number of customers that can be served with various combinations of labor (cooks and servers) and capital (stoves and ovens). 8) h) C) l-l mummmm 100 235 3 End .110 1-96 13!] 3'33 .1 5? Jill] 4.1-? \"(I aamamm m Is this production function a shortrun or long-run production function? How can you tell? Suppose that Che Bella employs 5 units of capital and 2 workers. How many diners will be served? Suppose that Che Bella employs 5 units of capital and 2 workers, but that the owner, Carlo, is considering adding a nephew to the payroll. What will the marginal product of Carlos nephew be? Notice that when Che Bella uses 1 unit of capital, the marginal product of the fth unit of labor is 16. But when Che Bella uses 5 units of capital, the marginal product of the fifth unit of labor is 43. Does this production function violate the law of diminishing marginal product of labor? Why or why not? Suppose that Che Bella employs 5 units of capital and 2 workers, but that the owner, Carlo, is considering adding another stove to the kitchen (which will raise the amount of capital input to 6 units). What will the marginal product of the stove be? Che Bella employs 5 units of capital and 2 workers. Carlo is considering the choice between hiring another worker or buying another stove. If stoves cost $8 and workers $12 per unit and hour, then at the margin, what is the most cost-effective choice for Carlo to make
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