There are two concepts of Efficiency - Technological Efficiency (TE) and Economic Efficiency (EE). Technological Efficiency occurs when it is not possible to increase output without increasing inputs. Economic Efficiency occurs when the cost of producing a given output is as low as possible. TE is an engineering matter; EE depends on the prices of productive resources. Suppose there are 4 different methods for making TV sets - a) Robot production: One person monitors the entire computer driven process b) Production Line: Workers specialize in a small part of the job as the emerging TV set passes them on a production line. c) Bench Production: Workers specialize in a small part of the job but walk from bench to bench to perform their tasks. d) Hand-tool production: A single worker crafts the whole TV set with a few hand-tools.

2. With reference to Example 9.5.1, let R(Q) = 80Q and C(Q) = Q2 + 10Q + 900. The firm can produce at most 50 units. (a) Draw the graphs of R and C in the same coordinate system. (b) Answer the following questions both graphically and by computation: (i) How many units must be produced for the firm to make a profit? (ii) How many units must be produced for the firm to maximize profits?

Another farmer purchases nitrate and phosphate fertilizers to produce corn, and the more of any one input he uses, the lower the marginal productivity of that input. Suppose the farmer decides to maximize output for a given cost. (That is, imagine a given isocost line.) Suppose the price of nitrate is 36 cents per pound and the price of phosphate is 24 cents per pound. Moreover, suppose the farmer currently chooses an input combination such that the marginal product of a pound of nitrate is 4 bushels of corn and the marginal product of a pound of phosphate is 3 bushels of corn. Should the farmer use the current mix of nitrate and phosphate? Should he use more nitrate and less phosphate? Or, should he use more phosphate and less nitrate? Please carefully draw a diagram with pounds of nitrate plotted along the horizontal axis and pounds of phosphate plotted along the vertical axis to support your conclusion. Moreover, please report the slope of the isocost line. And please report the…

3. For the cost function c = √q, show that marginal and average costs are always decreasing.

Where average costs of production are lowest when all output is produced by a single firm.

Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.)   NOTE: the options for the blank question is this Suppose Ike's Bikes is expecting to produce 500 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using _______ (once factory OR two factory OR three factory)

Let's play around with the concepts of total cost versus marginal cost Suppose a grocery store figures out that it costs $500 per week to hire a full time worker who can fill pickup orders. Create a table with room for 5 columns and 6 rows in your notes Use the top row for titles. The first (left) column should be titled Number of Workers and should have 0, 1, 2, 3, 4 as values. We're going to analyze whether the store should hire 0, 1, 2, 3 or 4 workers. Title the next column Total Cost (TC) and the third column Marginal Cost (MC). Put an X in the MC square corresponding to 0 workers. That would be the cost of going from negative 1 workers to 0 workers, let's leave it blank YOu'll see that marginal columns tend to start across from the first unit. We'll use the remaining columns later. What is the Marginal Cost per week of hiring the 4th worker? $500 O $1,000 O $1,500 $2,000

Consider a production process where flowers are grown (the output) using gardeners (labor) and greenhouses (capital). The quantity of flowers grown per day with various combinations of labor and capital are shown in the table below. Suppose that each gardener is paid $160 per day and the greenhouse is rented for $400 per day. Fill in total cost in the table below. (Enter your responses as integers.) Labor 0 1 Labor 0 1 2 3 2345 5 Capital 1 1 1 1 1 Next, fill in average total cost in the table. (Enter your responses as real numbers rounded to two decimal places.) Capital Total Cost Average Total Cost $400 560 720 880 1,040 1,200 Output 0 80 Output 0 80 240 320 360 380 240 320 360 380 Total Cost $ 400 560 720 880 1040 1200

Introduction to Calculus in Economics: Calculus is a powerful tool used in economics. One of the initial applications areas is the study of a firm, a topic in microeconomics. An important function is the cost function function C (z), the cost of producing z items (of whatever they are selling). This question deals with just the cost function C (z). Problem Set question: The cost, in dollars, of producing z units of a certain item is given by C (z) = 5z – 8/I – 3. Find the production level that minimizes the average cost per unit. The number of units that minimizes the average cost is Number

Businesses wanted to reduce their cost to the minimum without compromising the product quality and violating laws. The total fixed cost decreases if the output increases. Thus the business is left with the variable cost to manage. Notably, the concept of the economies of scale also works for the government, non-profit organizations and individuals. The entity becomes more efficient as it produces more output and reduces cost as a result. The organization can benefit from the economics of scale, consequently, the consumers enjoy lower prices, and the economy expands to increase more demand. For huge businesses, economies of scale provide a competitive advantage over small enterprises. There are two types of economies of scale. The cost that the management can control is internal, while the cause for the cost to decrease attributed to geographic location, government policies, and industry changes are externals. Typically the internal economy of scale is found in large businesses as a…