1Consider the information in the attached file Currently the

1?Consider the information in the attached file. Currently the firm is using 4 robots and 36 workers to produce 12 units of output. What is the average total cost of production?

ATC = ?dollars

2.Consider the information in the attached file. Currently the firm is using 4 robots and 36 workers to produce 12 units of output. The demand for the product increases and the firm decides to produce 24 units. In the short run, the average total cost of producing 24 units will equal ? dollars.

3.Consider the information in the attached file. Currently the firm is using 4 robots and 36 workers to produce 12 units of output. The demand for the product increases and the firm decides to produce 24 units. If the new high level of demand proves to be permanent, in the long run, the average total cost of producing 24 units will equal ? dollars.

4.Consider the information in the attached file. If the level of output permanently increases to 36 units, the firm will use ? robots in the long run.

The following table shows the input-output relationships in a firm. The firm uses robots and workers to produce output. The number of robots used is fixed in the short run. For example, suppose that currently the firm is using 4 robots and 36 workers producing 12 units of output. If the firm decides to produce 24 units of output, it cannot increase the number of robots in the short run. Therefore it has to hire 144 workers to produce that quantity of output. In the long run, though, it can buy and use additional robots. You can see that robots and workers are substitute inputs: for any given level of output produced, the larger the number of robots the firm uses, the smaller is the number of workers needed. The wage rate is $1,200 per worker per production period. The cost of capital is $3,600 per robot per production period In SmartSite, enter your answers with no dollar signs, commas, or decimal places (unless otherwise stated) Quantity Number Number Number Number NumberNumber of Output Produced Robots Workers Robots Workers Robots Workers of of of of of 12 24 36 36 144 324 576 16 16 16 16 9 36 81 144 36 36 36 36 4 16 36 64

Solution

1. Currently the firm is using 4 robots and 36 workers to produce 12 units of output.

and Wages = 1200 and rent of capital = 3600

So total cost = 4*3600 + 36*1200

= 14400 + 43200 = 57600

average cost = total cost / Q = 57600/12 = 4800

2. For 24 units, total cost would be of 4 robots and 144 workers

total cost = 4*3600 + 144*1200

= 14400 + 172800 = 187200

average cost = 187200/24 = 7800

3.in the long run, the firm can change both robots and workers.

So 24 units can be produced either by ;

(4 robots + 144 workers = Total cost =187,200)

(16 robots + 36 workers = Total cost =16*3600 + 36*1200 = 100,800)

(36 robots + 16 workers = Total cost =36*3600 + 16*1200 = 148,800)

Ans: (16 robots + 36 workers = Total cost =16*3600 + 36*1200 = 100,800) average cost = 100800/24 = 4200

4. if output is 36, the firm can use

(4 robots + 324 workers = Total cost = 4*3600 + 324*1200 = 403,200, Average cost = 403200/36 = 11200)

(16 robots + 81 workers = Total cost =16*3600 + 81*1200 = 154,800, Average cost = 154800/36 = 4300)

(36 robots + 64 workers = Total cost =36*3600 + 64*1200 = 206,400, Average cost = 206400/36 = 5733.33)