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In: Economics

You manage a plant that​ mass-produces engines by teams of workers using assembly machines. The technology...

You manage a plant that​ mass-produces engines by teams of workers using assembly machines. The technology is summarized by the production function q=5KL

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=$40,000 per​ week, and each team costs w=$5,000 per week. Engine costs are given by the cost of labor teams and​ machines, plus ​$4,000 per engine for raw materials. Your plant has a fixed installation of 5 assembly machines as part of its design.

a. How many teams are required to produce 100 engines? To produce 100 ​engines, ____labor​ team(s) are required.

b. You are asked to make recommendations for the design of a new production facility. What capital/labor (K/L) ratio should the new plant accommodate if it wants to minimize the total cost of producing at any level of output q?

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