panal2 - Why(State the key condition used in your analysis...

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Additional Problem #2 : Production Analysis A jeans manufacturer hires workers to sew jeans in its factory and derives the following daily yields of total product, or jeans output (in pairs): (a) Does this production function exhibit increasing, decreasing, constant returns, or some combination of the three ? (b) Assuming the price of jeans is $30 per pair and each worker is paid $90 per day, if the jeans manufacturer acts to maximize profit, how many pairs of jeans will be produced? How many workers will be employed? What will the jean manufacturer's profit be at this output level?
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Unformatted text preview: Why? (State the key condition used in your analysis and show all work in the table above.) (c) Now assume that each worker's wage drops to $30 per day. What is the new profit maximizing total output? How many workers are hired at this level? Why? (d) As a result of the input cost decrease specified in part (c), have profits risen or fallen? By how much have profits changed ? TP (pairs) MP Total Value Product Total Input Cost Total Profit MVP MC Marginal Profit 0 0 1 5 2 15 3 20 4 23 5 24 6 23...
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