1. Sam's Smoothies hires workers to produce smoothies. The market for smoothies is perfectly competitive and...

1.

Sam's Smoothies hires workers to produce smoothies. The market for smoothies is perfectly competitive and the price of smoothies is $4. The labor market is competitive and the wage rate is $40 a day. That table shows the workers' total product schedule.

Number of workers	Quantity Produced (Smoothies per day)
1	40
2	100
3	180
4	240
5	290
6	330
7	360
8	380

How many workers will Sam's Smoothies hire to maximize profit and how many smoothies a day will it produce?

2. A company's cost function is estimated as: C(Q) = 300 + 2Q + Q² . If it produces 300 units per day, then what will be its: (a) average (total) cost? (b) average Variable cost, and (c) Marginal cost?

Expert Solution

1.

2. a) ATC = C/Q = 300/300 + 2x300/300 + 300²/300

ATC = 1 + 2 + 300 = 303

b. AVC = VC/Q = 2x300/300 + 300²/300 = 302

c. MC = dC/dQ = 2 + 2 x 300 = 602

Rahul Sunny answered 2 years ago

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