# complete with all the equipment he needs to make a dozen different kinds of donuts

doug wants to go into business. For \$6000 per month he cn rent a bakery complete with all the equipm Show more doug wants to go into business. For \$6000 per month he cn rent a bakery complete with all the equipment he needs to make a dozen different kinds of donuts (K=1). He must pay unionized donut makers a monthly salary of \$1600 each. He projects his production function to be Q=4K (^1/2) L (^1/2) (where Q is tons of donuts). Show computions. a. Based on the production function Doug will experience (decreasing/constant/increasing) returns to scale in the (long/short) run. Given this production function and all other things being equal we would expect to find (mainly small bakeries/mainly large bakeries/both large and small bakeries). b. what is Dougs monthly total cost function as a function of Q? TC = ____ + ____ ____ c. How many bakers will Doug hire to make 20 tons of donuts? ______ d. If Doug produces 20 tons of donuts what is the marginal cost per ton of donuts? e. if Doug produces 20 tons of donuts what is his average variable cost per ton? f. compute the total product (i.e. tons of donuts) if one worker (_____ tons) two workers (_____ton) and three workers (_____tons) are hired. These numbers would suggest that the marginal product of labor is (increasing/remaining constant/decreasing) as additional workers are hired and consequently the firms experienceing (diminishing returns / diseconomies of scale) throughout all production levels. Show less

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