Y5

Imagine a company that can serve customers either with a human worker or a robot worker named "Nano". Assume Nano can greet twice as many workers per hour as a human worker. Let Y=output defined as the number of customers greeted per hour, L=the number of human workers employed by the company, and K=the number of Nano robot workers employed by the company. Assume each human worker can greet 30 customers per hour but each Nano robot can greet 60 customers per hour.

Part a) Write out the production function that describes this company's production process, and draw a set of isoquants for this company.

Part b) Does this production function exhibit decreasing returns to scale, increasing returns to scale, or constant returns to scale? Be sure to justify your answer.

Part c) Give an intuitive description of the input cost conditions under which the company would choose to use only human workers (i.e., what would the cost of L per unit have to be compared to the cost of K per unit?).