Question

Supposed that the daily wage for miners is $110 and that of the muckers is $90 per day. Find the long run cost function for US Iron & Steel Co. (x teams produce 10x tons of iron ore per day.)

Answer 1

$200 to produce 10x ton of iron ore

Step-by-step explanation:

The cost for one day to produce 10x tons of iron ore is calculated as follows.

1 miner and 1 mucker work together to make 10x ton of iron ore where,

1 miners wage = $110

1 mucker wage = $90

This makes a total of $200 to produce 10x ton of iron ore.

The costs in the long run will remain same because the wages are fixed if the wages are negotiable or varies then in the long run the cost function can differ.