Use the information in the table to answer the questions blow. Show your calcula
ID: 1127663 • Letter: U
Question
Use the information in the table to answer the questions blow. Show your calculations
The company has to pay $500 a day for each oven and $ 300 a day for each chef
a) If the company operates Kitchen 2 and hires 3 chefs and produces 280 cookies a day. Is the company technologically efficient? Why or why not?
b) If the company operates Kitchen 1. It hires 3 chefs and produces 260 cookies per day. Is the company technologically efficient? Why or why not? Can the company increase production to 340 cookies a day in the short run? If yes, how?
c) If the company operates Kitchen 4. What is the marginal product of chef when the fourth chef is hired? When operating Kitchen 3, does the company experience diminishing marginal returns? Explain
d) If the company operates Kitchen 3. Can it increase production from 400 to 540 cookies per day in the short run? If yes, how?
Output (cookies per day) Chefs Kitchen 1 Kitchen 2 Kitchen 3 Kitchen 4 140 40 250 350 360 400430 500 540 520 110 220 300 130 180 260 310 330 340 400450 350420480 330 400470 OvensExplanation / Answer
A) no the company technology is not efficient because table shows that company can produce 300 cookies per day by hiring 3 chefs and operates in kitchen 2 but they are producing only 280 cookies.
B) yes the company is technology efficient because tables shows that company can produce 260 cookies per day by hiring 3 chefs and operates in kitchen 1. Yes the company increases production to 340 cookies per day in the short run if it hires total 5 chefs.
C) marginal product of hiring 4 chefs in kitchen 4= 430-350= 80 cookies
Marginal product of hiring 3 chefs in kitchen 4= 350-250= 100 cookies.
Yes company experiences dimnishing marginal returns because marginal product of chef decreasing.
D) no company cannot increase production from 400 to 540 cookies per day if operates in kitchen 3. Because company can produce max to 470 cookies in short run.
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