Question
In: Economics
Andi recently opened a car wash business on Jalan Margonda Raya, Depok. Andi only uses two...
Andi recently opened a car wash business on Jalan Margonda Raya, Depok. Andi only uses two types of input, namely labor and equipment (automatic car washer). Labor costs and machine costs are IDR 120,000.00/day and IDR 200,000.00/day respectively. The following is information on the number of workers and cars (output) washed per day at Andi's workshop:
|
Number of Labor |
Number of Machines |
Output |
Marginal Product of Labor |
Labor Costs (IDR) |
Machine Cost (IDR) |
Total Cost (IDR) |
|
1 |
2 |
5 |
||||
|
2 |
2 |
10 |
||||
|
3 |
2 |
20 |
||||
|
4 |
2 |
35 |
||||
|
5 |
2 |
55 |
||||
|
6 |
2 |
70 |
||||
|
7 |
2 |
80 |
Answer the questions below.
a. Complete the table above!
b. Also calculate the productivity per worker. What is your conclusion? Explain!
c. When does Ali's workshop experience a diminishing marginal product of labor? Explain!
d. Based on the information from the table above (and some additional information), draw the following curves:
i. Total Product, Marginal Product of Labor, Average Product of Labor (in one chart). Explain the relationship between curves!
ii. Average variable costs, Average fixed costs, Marginal costs and Average total costs (in one graph). Explain the relationship between curves!
e. Explain the relationship between the curves in points d (i) and (ii) above!
f. Does Andi's workshop experience economies of scale or diseconomies of
scale? Explain what these two concepts mean!
Solutions
Expert Solution
a)
| Labor | Machines | Output | Marginal product of labor | Average Product of labor | Labor cost | Machine Total Cost | Total cost |
| 1 | 2 | 5 | 5 | 5.00 | 120,000 | 200,000 | 320,000 |
| 2 | 2 | 10 | 5 | 5.00 | 240,000 | 200,000 | 440,000 |
| 3 | 2 | 20 | 10 | 6.67 | 360,000 | 200,000 | 560,000 |
| 4 | 2 | 35 | 15 | 8.75 | 480,000 | 200,000 | 680,000 |
| 5 | 2 | 55 | 20 | 11.00 | 600,000 | 200,000 | 800,000 |
| 6 | 2 | 70 | 15 | 11.67 | 720,000 | 200,000 | 920,000 |
| 7 | 2 | 80 | 10 | 11.43 | 840,000 | 200,000 | 1,040,000 |
b) Productivity per worker (Output / Labor) is nothing but average product of labor which is calculated in the table below which shows that average product of labor is rising till output level of 7.
c) Diminishing marginal returns of labor start from output level of 5 because marginal product of labor start falling after that level of output.
d)
| Total Output | Total cost | Average variable cost | Average fixed cost | Marginal cost | Average total cost |
| 5 | 320,000 | 24,000.00 | 40,000.00 | 64,000.00 | |
| 10 | 440,000 | 24,000.00 | 20,000.00 | 120,000.00 | 44,000.00 |
| 20 | 560,000 | 18,000.00 | 10,000.00 | 120,000.00 | 28,000.00 |
| 35 | 680,000 | 13,714.29 | 5,714.29 | 120,000.00 | 19,428.57 |
| 55 | 800,000 | 10,909.09 | 3,636.36 | 120,000.00 | 14,545.45 |
| 70 | 920,000 | 10,285.71 | 2,857.14 | 120,000.00 | 13,142.86 |
| 80 | 1,040,000 | 10,500.00 | 2,500.00 | 120,000.00 | 13,000.00 |
Rahul Sunny answered 1 year agoRelated Solutions
Mr. Z, a calendar year taxpayer, opened a new car wash. Prior to the car wash’s...
Mr. Z, a calendar year taxpayer, opened a new car wash. Prior to
the car wash’s grand opening on October 8, Mr. Z incurred various
start-up expenditures (rent, utilities, employee salaries,
supplies, and so on). In each of the following cases, compute Mr.
Z’s first-year deduction with respect to these expenditures. (Do
not round intermediate calculations. Round your final answers to
the nearest whole dollar amount.)
A) The start-up expenditures totaled $4,920. B) The start-up
expenditures totaled $33,440. C) The...
Q1: Yap and Viji opened a new car wash centre. It was agreed that Yap would...
Q1: Yap and Viji opened a new car wash centre.
It was agreed that Yap would manage the operations of the centre
and receive a fixed salary each month and Viji would receive a
fixed salary and any profits or losses remaining after deduction of
expenses and taxes.
Required:
State, with reasons, whether a partnership exists in the above
situation.
P/S : PLEASE FULFILL THE REQUIREMENT .
A car wash offers both a regular wash and a deluxe wash for their customers. They...
A car wash offers both a regular wash and a deluxe wash for
their customers. They track their customers over time and determine
that a customer orders the deluxe wash with a probability of 0.3.
They also offer air fresheners for their customer for a nominal fee
and find that regular wash customers get an air freshener with a
probability of 0.45, and deluxe wash customers get an air freshener
with probability 0.8. Assume that the car wash only offers...
University Car Wash built a deluxe car wash across the street from campus.
University Car Wash built a deluxe car wash across the street from campus. The new machines cost $ 270,000 including Installation. The company estimates that the equipment will have a residual value of $ 24,000. University Car Wash also estimates It will use the machine for six years or about 12.000 total hours, Actual use per year was as follows:
Seclusion BaySeclusion Bay has two car wash companiescar wash companies?, one owned by CheriCheri and the...
Seclusion BaySeclusion Bay
has two
car wash companiescar wash companies?,
one owned by
CheriCheri
and the other owned by
LeonLeon.
Suppose that
CheriCheri
and
LeonLeon
have two? strategies: to? collude, fix the monopoly? price, and
limit the number of
car washescar washes?,
or to break the?collusion, cut the? price, and produce more
car washescar washes.
??
The table gives the payoff matrix? (in dollars) for the game that
CheriCheri
and
LeonLeon
play.
CheriCheri?'s
strategies
?(red squares)
LeonLeon?'s
strategies
?(blue squares)...
University Car Wash built a deluxe car wash across the street from campus. The new machines...
University Car Wash built a deluxe car wash across the street
from campus. The new machines cost $240,000 including installation.
The company estimates that the equipment will have a residual value
of $30,000. University Car Wash also estimates it will use the
machine for six years or about 12,000 total hours. Actual use per
year was as follows: Year Hours Used 1 2,600 2 2,100 3 2,200 4
1,800 5 1,600 6 1,700 1. Prepare a depreciation schedule for six...
University Car Wash built a deluxe car wash across the street from campus. The new machines...
University Car Wash built a deluxe car wash across the street
from campus. The new machines cost $261,000 including installation.
The company estimates that the equipment will have a residual value
of $27,000. University Car Wash also estimates it will use the
machine for six years or about 12,000 total hours. Actual use per
year was as follows:
Year
Hours
Used
1
2,800
2
1,400
3
1,500
4
2,500
5
2,300
6
1,500
Required:
1. Prepare a depreciation schedule for...
University Car Wash built a deluxe car wash across the street from campus. The new machines...
University Car Wash built a deluxe car wash across the street
from campus. The new machines cost $264,000 including installation.
The company estimates that the equipment will have a residual value
of $25,500. University Car Wash also estimates it will use the
machine for six years or about 12,500 total hours. Actual use per
year was as follows: Year Hours Used 1 2,900 2 1,300 3 1,400 4
2,600 5 2,400 6 1,900
1. Prepare a depreciation schedule for six...
University Car Wash built a deluxe car wash across the street from campus. The new machines...
University Car Wash built a deluxe car wash across the street
from campus. The new machines cost $258,000 including installation.
The company estimates that the equipment will have a residual value
of $28,500. University Car Wash also estimates it will use the
machine for six years or about 12,500 total hours. Actual use per
year was as follows:
Year
Hours Used
1
2,700
2
1,500
3
1,600
4
2,400
5
2,200
6
2,100
1. Prepare a depreciation schedule for six...
University Car Wash built a deluxe car wash across the street from campus. The new machines...
University Car Wash built a deluxe car wash across the street
from campus. The new machines cost $255,000 including installation.
The company estimates that the equipment will have a residual value
of $22,500. University Car Wash also estimates it will use the
machine for six years or about 12,500 total hours. Actual use per
year was as follows:
Year
Hours Used
1
3,100
2
1,600
3
1,700
4
2,300
5
2,100
6
1,700
Problem 7-5A Part 1
Required:
1. Prepare...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- state the input and output of the traveling salesman problem. give the best lower bound on...
- please use C++ Create a class named Byte that encapsulates an array of 8 Bit objects....
- What are the differences between an introduction and the background of the research? What is a...
- Down Under Boomerang, Inc., is considering a new 3-year expansion project that requires an initial fixed...
- What do you think about adult and childhood obesity? What do you really think is at the...
- When does chain of custody begin and when does it end?
- List the policies thst a small business woupd need to develop. Include in each of these...
ADVERTISEMENT