Suppose you decide to expand your small printing business. Should you start a night shift and hire more workers? Should you buy more expensive but faster computers which will enable the current staff to keep up with the work? Or should you do some combination of the two? Obviously, the way such a decision is made in practice involves many other considerations- such as whether you could get a suitably trained night shift, or whether there are any faster computers available. Nevertheless, you might model the quantity, P, of work produced by your business as a function of two variables: your total number, N, of workers, and the total value, V , of your equipment.

2. Guess a plausible production function P = f(N, V ) whose contours have approximately the shape of the contour diagrams you chose in 1. as reasonable to model the production function for your printing business.

1. Which of the following contour diagrams reasonably models the behavior expected of the produc- tion function? Motivate your answer. Motivate also why one of the two diagrams is unreasonable. V V P#3 P = 2 P=1 1. Which of the following contour diagrams reasonably models the behavior expected of the produc- tion function? Motivate your answer. Motivate also why one of the two diagrams is unreasonable. V V P#3 P = 2 P=1