Statistics Solutions

[Solved] You manage Dirt Diggers, an excavating firm that excavates roadside ditches for laying drainpipes. Its output follows the production function:

Question: You manage Dirt Diggers, an excavating firm that excavates roadside ditches for laying drainpipes. Its output follows the production function:

Q = 10L -.1L 2

where L denotes labor hours and Q the length of the ditch in meters. You can hire labor at the going wage rate of $12 per hour. As the manager of DD you want to earn as high a profit as possible.

  1. You have received an offer to excavate 250 meters for a lump sum payment of $500. Should you accept the offer? Explain with appropriate calculations.

(b) Suppose that instead of the previous offer, you are now offered as much or as little excavation work at a price of $2.00 per meter dug. Should you accept the offer ? Why or why not ? If you accept the offer calculate DD’s resulting profit. Also, calculate the optimal level of output (meter dug) and the level of labor usage.

Price: $2.99
Solution: The downloadable solution consists of 1 pages
Deliverable: Word Document


∴ Other downloads you may be interested in ∴

log in to your account

Forgot password?
Don't have a membership account?
REGISTER

reset password

Back to
log in

sign up

Back to
log in