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You manage a plant that mass-produces engines by teams of workers using assembly machines. The technology is summarized by the production function 10KL where
You manage a plant that mass-produces engines by teams of workers using assembly machines. The technology is summarized by the production function 10KL where q is the number of engines per week, K is the number of assembly machines, and L is the number of labor teams. Each assembly machine rents for r-$10,000 per week, and each town costs w $5,000 per week Engine costs are given by the cost of labor teams and machines, plus $2,000 per engine for raw materials. Your plant has a fed installation of 5 assembly machines as part of its design The total cost of producing q units of output (TC) OA TC -5,000 OC. TC-50,000-50004 OE TC 50,000+7,000 The average cost (AC) of producing a machines is OA. 50 000 AC 100 50,000 AC- +2.100 OF AC 50,000 5,000 2,000 OB. TC-50,000+5,000+2,000 OD TC 5,000+2,000 OB 50,000 AC OD. 50.000 AC 2.000)
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