The desert town of Dry Gulch buys its water from The desert town of Dry Gulch buys its water from LowTech Inc. LowTech hires residents to walk to the nearest oasis and carry back buckets of water. Thus, the inputs to the production of water are workers and buckets. The walk to the oasis and back takes one full day. Each worker can carry either 1 or 2 buckets of water but no more. a. Draw some of LowTech’s isoquants. With buckets renting for $1 a day and workers earning $2 per day, draw some of LowTech’s isocosts. Draw the expansion path. b. LowTech owns 5 buckets. It could rent these out to another firm at $1 per day, or it could rent additional buckets for $1 per day, but neither transaction could be arranged without some delay. Illustrate the following, using tables, graphs, or both: the total product and marginal product of labor; the shortrun total cost, variable cost, average cost, average variable cost, and marginal cost; the long-run total cost, long-run average cost, and lo
The desert town of Dry Gulch buys its water from The desert town of Dry Gulch buys its water from LowTech Inc. LowTech hires residents to walk to the nearest oasis and carry back buckets of water. Thus, the inputs to the production of water are workers and buckets. The walk to the oasis and back takes one full day. Each worker can carry either 1 or 2 buckets of water but no more. a. Draw some of LowTech’s isoquants. With buckets renting for $1 a day and workers earning $2 per day, draw some of LowTech’s isocosts. Draw the expansion path. b. LowTech owns 5 buckets. It could rent these out to another firm at $1 per day, or it could rent additional buckets for $1 per day, but neither transaction could be arranged without some delay. Illustrate the following, using tables, graphs, or both: the total product and marginal product of labor; the shortrun total cost, variable cost, average cost, average variable cost, and marginal cost; the long-run total cost, long-run average cost, and lo
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.3P
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The desert town of Dry Gulch buys its water from
The desert town of Dry Gulch buys its water from LowTech Inc. LowTech hires residents to walk to the nearest oasis and carry back buckets of water. Thus, the inputs to the production of water are workers and buckets. The walk to the oasis and back takes one full day. Each worker can carry either 1 or 2 buckets of water but no more.
a. Draw some of LowTech’s isoquants. With buckets renting for $1 a day and workers earning $2 per day, draw some of LowTech’s isocosts. Draw the expansion path.
b. LowTech owns 5 buckets. It could rent these out to another firm at $1 per day, or it could rent additional buckets for $1 per day, but neither transaction could be arranged without some delay. Illustrate the following, using tables, graphs, or both: the total product and marginal product of labor; the shortrun total cost, variable cost, average cost, average variable cost, and marginal cost; the long-run total cost, long-run average cost, and long-run marginal cost.
The desert town of Dry Gulch buys its water from
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