Question

The Noble Widget Corporation produces just one product, widgets. The company’s new economist has calculated a short-run production function as follows:

Q=7V+0.6V²−0.1V³
where Q is the number of widgets produced per day and V is the number of production workers working an 8-hour day.
a. Develop a production schedule with V equaling 1 to 10.

Answer 1

The question involves calculating the output of widgets for different numbers of workers using a given production function, then estimating production costs based on the workers' wage rate and the revenue they generate.

Step-by-step explanation:

The question involves developing a production schedule using the given production function Q=7V+0.6V²-0.1V³, where Q represents the quantity of widgets produced and V represents the number of production workers. We will calculate the quantity of widgets produced for different numbers of workers, ranging from 1 to 10, and then estimate the production costs based on the wage rate and the revenue generated per worker.

First, we determine the output for each integer value of V (number of workers) from 1 to 10 and then multiply the number of workers by their hourly wage ($10) to find the cost of production at each level of employment.

If a worker can produce two widgets per hour and each widget sells for $4, this implies that each worker generates $8 in revenues per hour. Hence, to maximize profits, the employer would be willing to pay each worker up to $8 per hour.