Week 6

Managerial Economics

Order of Business

• Homework

• Assigned Lectures

• Other Material

• Lectures for Next Week

Homework

Workers1 2 3 4 5 6

1 1400 2438 3372 4244 5073 5870Thumple- 2 2438 4244 5870 7389 8833 10221blowers 3 3372 5870 8119 10221 12218 14137

4 4244 7389 10221 12865 15380 177955 5073 8833 12218 15380 18386 212736 5870 10221 14137 17795 21273 24613

Find as many production isoquants as you can. That is,

find as many points that lie on a particular production isoquant.

Does this production function have diminishing returns to proportion? Illustrate your answer with at least two examples.

Compute the average product of labor when there are two thumpleblowers and 3 workers; compute the marginal product of a fourth worker

Does this production function have increasing returns to scale?

Illustrate your answer with at least two examples.

Suppose a firm's cost function is C(q) = 80 + 12q + 5q2.

Compute TC, MC, AC and VC when q = 5

Using the data from the previous problem, determine what level of output minimizes AC? At that level of output, what is AC? MC?

I have two plants. One has a cost function C= 3 + 10q. The second plant has a cost function C = 15 + q + 0.5q2. I want to produce 80 units of the product. How many

should I produce at the first plant? At the second? Explain your

answer.

Lectures for Last Week• The Production Function• The General Production Function• Properties of Production Functions• Basics of Cost Functions• Mathematical Cost Functions• Mathematical Cost Functions-2• Mathematical Cost Functions-3• Solving the Problem• Properties of Cost Functions• Applications of Cost Functions

•The Production Function

•The General Production Function

•Properties of Production Functions

•Basics of Cost Functions

•Mathematical Cost Functions

•Mathematical Cost Functions-2

•Mathematical Cost Functions-3

•Solving the Problem

•Properties of Cost Functions

•Applications of Cost Functions

Lectures for Next Week• Basics of Competition• The Firm's Supply Curve• A Competitive Industry• A Competitive Industry-More• Changes in Factor Prices• Equilibrium with Different Cost Functions• Competitive Diversity• Three Competition Problems• Solution to Three Competition Problems

Basics of Competition

The Firm's Supply Curve

A Competitive Industry

A Competitive Industry-More

Changes in Factor Prices

Equilibrium with Different Cost

Functions

Competitive Diversity

Three Competition Problems

Solution to Three Competition

Problems