Ajax, Inc. Assembles gadgets. it can make each gadget either by hand or with a special...

Ajax, Inc. Assembles gadgets. it can make each gadget either by hand or with a special gadget-making machine. each gadget can be assembled in 15 minutes by a worker or in 5 by a machine. the firm can also choose to make some by hand and some by machine. both are perfect substitutes and they are the only inputs required for production.

a) write down the firm's production function. Let G be number of gadgets assembled, M the number of hours the machine is used, and L the number of hours of labor.

b) say that it costs $30 per hour for the machine and $10 per hour for a worker. graphically represent the cost minimizing output if the firm wants to produce 120 gadgets.

c) what are the cost minimizing input quantities if it costs the firm $30 an hour for the machine and $10 an hour for a worker?

d) derive the expression for the long-run total cost that the firm incurs as a function of q. represent this in a diagram

Expert Solution

Rahul Sunny answered 2 years ago

Ajax, Inc., assembles gadgets. It can make each gadget either by hand or with a special gadget-making machine.

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