Discuss the relationship of torts to risk management.
The
owner of a car wash is trying to decide on the number of people to
employ based on the following short-run production function: Q = 6L –
0.5L2
Where Q = Number of car washers per hour L = Number of workers
Generate a schedule showing total product, average product, and marginal product, Plot this schedule on a graph.
Suppose
the price of basic car wash (no undercoating, no waxing treatment, etc)
in his area of business is $5. How many people should he hire if he
pays each worker $6/hour?
Suppose he considers hiring students
on a part-time base for $4/hour. Do you think he should hire more
workers at this lower rate? Explain.
You are given the following cost functions:
TC = 100 + 60Q – 3Q2 + .1Q3
TC = 100 +60Q + 3Q2
TC = 100 + 60Q
Compute the average variable cost, average cost, and marginal cost for each function. Plot them on a graph.
In
each case, indicate the point at which diminishing returns occur. Also
indicate the point of maximum cost efficiency (i.e. the point of minimum
average cost). Is this company operating in stage II?
For each
function, discuss the relationship between marginal cost and average
variable cost and between marginal cost and average cost. Also discuss
the relationship between average variable cost and average cost.
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