Question

Touchie MacFeelie publishes comic books. The only inputs he needs are old jokes and cartoonists. His production function is Q = J^1/2 * L^3/4, where J is the number of old jokes used, L the number of hours of cartoonists’ labor used as inputs, and Q is the number of comic books produced.

1) Touchie MacFeelie’s irascible business manager, Gander Mac-

Grope, announces that old jokes can be purchased for $1 each and that

the wage rate of cartoonists’ labor is $2.

(a) Suppose that in the short run, Touchie is stuck with exactly 100 old

jokes (for which he paid $1 each) but is able to hire as much labor as he

wishes. How much labor would he have to hire in order produce Q comic

books? 

(b) Write down Touchie’s short-run total cost as a function of his output

(c) His short-run marginal cost function is ____

(d) His short-run average cost function is ____

2) Touchie asks his brother, Sir Francis MacFeelie, to study the

long-run picture. Sir Francis, who has carefully studied the appendix to

(a) If all inputs are variable, and if old jokes cost $1 each and cartoonist

labor costs $2 per hour, the cheapest way to produce exactly

one comic book is to use ____ jokes and ____ hours of labor. (Fractional jokes are certainly allowable.)

(b) This would cost ____

(c) Given our production function, the cheapest proportions in which to

use jokes and labor are the same no matter how many comic books we

print. But when we double the amount of both inputs, the number of

comic books produced is multiplied by ____

Answer 1

a) leur of old jokes = 1 (T) Cartoonist's labor = 2 (a) = 0.13²,34 J=100 O = 0.1(100), 3/4 =lo (0.1) L 3/4 0 = (3/4 000 / 2 = 0 413 / TC = whark = 10o (,)t 2013 - 100 +20% Mc = OTC ocea () o's 1 me = 8 3 /