Production and Cost Analysis

Production and Cost Analysis

Question 1 a

Table 1: Marginal Utility of Cargo transported with respect to Drivers employed.

Drivers employed

Total Cargo Transported (tons)

Marginal Utility of cargo

1

5

5

2

12

7

3

21

9

4

32

11

5

40

8

6

46

6

7

51

5

8

50

-1

In the production function of Jennifer Trucking Company (JTC), the number of rigs and monthly salary of the drivers are fixed inputs. The no of drivers and cargo transported are variable inputs in the production function of JTC. The cargo transported increases in returns to the number of driver in the range of 1-5 drivers; it never remains constant while the cargo transported shows diminishing returns to the number of drivers from 5-8.

Question 1 ...