Question #53727

Suppose that the Acme Gumball Company has a fixed proportions production function that requires it to use two proportions production function that requires it to use two gumball presses and one worker to produce 1000 gumballs per hour . Explain why the cost per hr of producing 1000 gumballs is 2v+w where v is the hourly rent for gumball presses and w is the hourly wage.

Expert's answer

If the Acme Gumball Company has a fixed proportions production function that requires it to use two gumball presses and one worker to produce 1000 gumballs per hour, then the cost per hr of producing 1000 gumballs is 2v+w where v is the hourly rent for gumball presses (use of 2 presses) and w is the hourly wage (one worker).

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