Tutorial Question 1

Yvette's Yard Service (YYS) is a company that provides lawn mowing services. Suppose that the only way to mow one lawn is for one worker to use one lawn mower for one day. Two workers with one lawn mower, or one worker with two lawn mowers, can still only mow one lawn per day.

1. Draw the one unit isoquant for YYS.

2. Assuming that YYS' production technology exhibits constant returns to scale, draw several more isoquants.

3. Assuming that YYS rents lawn mowers for $4 per day and pays workers $6 per day, draw some of the isocosts for YYS.

4. Continuing to assume that YYS rents lawn mowers for $4 per day and pays workers $6 per day, illustrate the derivation of the optimal input bundle for a various dierent output levels for YYS. (The locus of the optimal input bundles for various dierent output levels is known as an output expansion path.)

5. Derive the long-run (total) cost function for YYS.