Question

:S ECO 20250 EXAMMATION 2 Sample Numerical Questions 5. An Amazon distribution warehouse facility can employ either workers (L) or robots (K) to complete shipment orders. Robotic technoloav is still in its nascent stages and hence is not as productive as workers. In particular a shipment order can be completed by a worker in one hour, while a robot takes 2 hours to complete the same order. Let Q represent the number of customers served in a day. The production function for the center is given below: Q=f(L,K) = L + K, MP. = 1, MPx = MRTS = 2. The hourly wage for labor and rental rate for robots, respectively are w = r = $20. a) What is the cost-minimizing input combination for completing orders? Write L' and K* in the answer sheet. (2 points) b) What is the cost function? Write C(O) in the answer sheet (1 point) c) What is the Marginal Cost? Write MC in the answer sheet (1 point) Amazon has a monopoly in online retail and the market demand for online shipments is Q = 80-p. How many shipments will be completed? Write in the answer sheet. (2 points) What is the shipment price? Write p in the answer sheet. (1 points)

Answer 1

O-L + & MRTS - Mr - 1/2 = 2 ver? 20 2-0 - 4 kao t = we ark. TC= 200 Marginal cost is the change in total Cost produced. additional unit due to an Mc D T = 20 c) Oo80P TR 800 - 02 . MR-80-20 Profit is mak when Mrame gor 2d = 20 com = 60 =30=0" berice= 80-30=50 e) 1 PM, so