Question

Resources Quantity of workers Quantity of cupcakes (in dozens) Earl owns and operates a food trailer at the State Fair. After being featured on a national televison network, his deep-fried cupcakes dramatically increase in popularity, and Earl hires more workers at a cost of $80 per worker per day. Earl also pays $40 per day just to park his trailer, even if he has no workers. The table shows the number of workers and the number of cupcakes that they can produce in a day. On the first graph, plot Earl's production function per day. 2 3 15 24 30 30 Production function Quantity of cupcakes (in dozens) 0 1 2 7 3 4 5 6 Number of workers hired On the second graph, chart Earl's total-cost curve Total cost 360

Answer 1

With the given number of workers and the quantity of cupcakes produced by them, plot the production function by keeping number of workers on the X-axis and the quantity of cupcakes produced on the Y-axis. Therefore, the production function will look like follows: Quantity of Cupcakes 1 1 2 5 6 3 4 Number of Workers The fixed cost is given to be of $40. Further, variable cost is of $80 per worker. Also, total cost is the summation of fixed cost and variable cost. Therefore, the costs will be:

0 0 40 40 Quantity of Workers Fixed Cost (FC) Variable Cost (VC) Total Cost (TC) 40 40 80 120 160 200 3 40 240 280 4 320 440 40 480 520 40 360 40 400 The cost function is plotted as follows: Total Cost 0 3 6 9 24 27 30 33 12 15 18 21 Quantity of Cupcakes