Question

The table below represents the production function for Hawg Wild, a small catering company specializing in barbecued pork.  The numbers in the cells represent the number of customers that can be served with various combinations of labor and capital.

Labor (L) 1 100 132 155174190 205 2 152 200 235 264289310 3 193 255 300337368396 4 230 303 357 400 437470 5 263 3474087500 538 6 | 293 | 387 | 455 | 510 | 558 | 600 Capital

1. Is this production function a short-run or long-run production function?  How can you tell?
2. Suppose that Hawg Wild employs 5 units of capital and 2 workers. How many diners will be served?
3. Suppose that Hawg Wild currently employs 5 units of capital and 2 workers, but the owner is considering adding his nephew to the payroll. What will the marginal product of the nephew be?
4. Note that when Hawg Wild uses 1 unit of capital, the marginal product of the fifth unit of labor is 16.  But when Hawg Wild uses 5 units of capital, the marginal product of the fifth unit of labor is 43.  Does this production function violate the property of diminishing marginal product of labor?  Why or why not?
5. Suppose that Hawg Wild currently employs 5 units of capital and 2 workers, but the owner is considering adding another meat smoker to the kitchen (which will raise the amount of capital input to 6 units). What will the marginal product of the smoker be?
6. Suppose that Hawg Wild currently employs 5 units of capital and 2 workers.  The owner is considering either hiring another worker or buying another smoker. If smokers cost $8 and workers cost $12, then at the margin, what is the most cost-effective choice for the owner to make?

Answer 1

bo copit ta amd laberr > o) For K5 and L 2ha Fr 6th Laloer 15 . Than holdina k comstot reasima L i*m 4imimishina magmas produc laoor mp of 6+n capit 8 ita 8 MP MPK MP« tw.t