|Assignment ID Number||AFFGEHU83939HD|
|Type of Document||Essay|
|Number of Pages||10 Pages|
Production Cost Analysis and Estimation Applied Problems
Please complete the following two applied problems:
William is the owner of a small pizza shop and is thinking of increasing products and lowering costs. Williams pizza shop owns four ovens and the cost of the four ovens is $1,000. Each worker is paid $500 per week.
Workers employed Qty of pizzas produced per week
Show all of your calculations and processes. Describe your answer for each question in complete sentences, whenever it is necessary.
Which inputs are fixed and which are variable in the production function of Williams pizza shop? Over what ranges do there appear to be increasing, constant, and/or diminishing returns to the number of workers employed?
What number of workers appears to be most efficient in terms of pizza product per worker?
What number of workers appears to minimize the marginal cost of pizza production assuming that each pizza worker is paid $500 per week?
Why would marginal productivity decline when you hire more workers in the short run after a certain level?
How would expanding the business affect the economies of scale? When would you have constant returns to scale or diseconomies of scale? Describe your answer.
The Paradise Shoes Company has estimated its weekly TVC function from data collected over the past several months, as TVC = 3450 + 20Q + 0.008Q2 where TVC represents the total variable cost and Q represents pairs of shoes produced per week. And its demand equation is Q = 4100 25P. The company is currently producing 1,000 pairs of shoes weekly and is considering expanding its output to 1,200 pairs of shoes weekly. To do this, it will have to lease another shoe-making machine ($2,000 per week fixed payment until the lease period ends).
Show all of your calculations and processes. Describe your answer for each item below in complete sentences, whenever it is necessary.
Describe and derive an expression for the marginal cost (MC) curve.
Describe and estimate the incremental costs of the extra 200 pairs per week (from 1,000 pairs to 1,200 pairs of shoes).
What are the profit-maximizing price and output levels for Paradise Shoes? Describe and calculate the profit-maximizing price and output.
Discuss whether or not Paradise Shoes should expand its output further beyond 1,200 pairs per week. State all assumptions and qualifications that underlie your recommendation.
|Criteria||0 – 1 Points||2 – 3 Point||4 – 5 Points||Total|
|Professional communication||Unprofessional communication; many errors; no APA||Minor grammar, spelling, and APA errors||Postings are professional and in standard written English with APA|
|Complete addressing of assessment criteria||Criteria not fully addressed||Minimal response to criteria; minor aspects missing||All criteria are fully addressed|
|Evidence of critical thinking or extending information||Critical thinking or extending information not evident||Obvious responses to questions; little thought evident||Posts demonstrate critical thinking with evidence base from research or experience|
|Course connections.||No connections provided||Minimal connections provided to readings/activities||Clear connections to readings/activities|
|Submitted an overview / summary of the case selected for analysis. Also identified those procedural steps to be analyzed.||Did not provide an adequate overview or summary of the selected case or failed to identify those steps to be analyzed.||Provides an adequate overview or summary of the selected case and steps to be analyzed though may not be clear or complete.||Case overview is clearly presented including all appropriate investigative steps to be analyzed.|