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# HW5 - Econ 1 Tang Fall Quarter 2007 Homework 5 and pg...

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Econ 1: Tang Fall Quarter 2007 Homework 5: Chapters 10, 11, and pg 263-273 of Chapter 12 Due Friday December 7, at the beginning of class. Please write your name, PID, and section number/TA name on your homework. 1. The table below shows the production function of Mario’s Pizza-to-Go. Mario must pay \$100 a day for each oven he rents and \$75 a day for each kitchen hand he hires. a. Find and graph the average total cost curve for each plant size. b. Draw Mario’s long-run average cost curve. c. Over what output range does Mario experience economies of scale? d. Explain how Mario uses his long-run average cost curve to decide how many ovens to rent. Labor Output (pizzas per day) (workers per day) Plant 1 Plant 2 Plant 3 Plant 4 1 4 8 11 13 2 8 12 15 17 3 11 15 18 20 4 13 17 20 22 Ovens (number) 1 2 3 4 2. A firm’s cost curves are given in the following graph: a. Redraw the cost curves and label them. b. Over what price range will the firm be making a profit?

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