A pizzeria, which operates in a perfectly competitive hospitality market, can produce pizzas if it has its premises and a pizza oven (which cost £10 per night), ingredients (£3 per pizza), and workers (each of whom earn £40 per night). The number of pizzas that can be produced per night, depending on the number of workers employed by the pizzeria, is given in the following table: Workers employed 1 2 3 4 5 Pizzas per night 20 36 48 56 60 HINT: In the following, you will be asked to draw curves in diagrams based on the above table. In each diagram, please proceed as follows: First, place a dot in the diagram, each representing a column in the table. Second, label each dot with its coordinates. Third, connect dots with straight lines to obtain the required curve. c) Draw the total cost function. d) Explain how the firm can use this cost function to determine its profit maximising quantity.

Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter11: The Firm: Production And Costs
Section: Chapter Questions
Problem 15P
icon
Related questions
Question
A pizzeria, which operates in a perfectly competitive hospitality market, can produce pizzas if it has
its premises and a pizza oven (which cost £10 per night), ingredients (£3 per pizza), and workers
(each of whom earn £40 per night). The number of pizzas that can be produced per night, depending
on the number of workers employed by the pizzeria, is given in the following table:
Workers employed 1 2 3 4
5
Pizzas per night
20 36 48 56 60
HINT: In the following, you willI be asked to draw curves in diagrams based on the above table. In
each diagram, please proceed as follows: First, place a dot in the diagram, each representing a
column in the table. Second, label each dot with its coordinates. Third, connect dots with straight
lines to obtain the required curve.
c) Draw the total cost function.
d) Explain how the firm can use this cost function to determine its profit maximising quantity.
Transcribed Image Text:A pizzeria, which operates in a perfectly competitive hospitality market, can produce pizzas if it has its premises and a pizza oven (which cost £10 per night), ingredients (£3 per pizza), and workers (each of whom earn £40 per night). The number of pizzas that can be produced per night, depending on the number of workers employed by the pizzeria, is given in the following table: Workers employed 1 2 3 4 5 Pizzas per night 20 36 48 56 60 HINT: In the following, you willI be asked to draw curves in diagrams based on the above table. In each diagram, please proceed as follows: First, place a dot in the diagram, each representing a column in the table. Second, label each dot with its coordinates. Third, connect dots with straight lines to obtain the required curve. c) Draw the total cost function. d) Explain how the firm can use this cost function to determine its profit maximising quantity.
Expert Solution
steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Marginal Product
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Exploring Economics
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
ECON MICRO
ECON MICRO
Economics
ISBN:
9781337000536
Author:
William A. McEachern
Publisher:
Cengage Learning
Microeconomics A Contemporary Intro
Microeconomics A Contemporary Intro
Economics
ISBN:
9781285635101
Author:
MCEACHERN
Publisher:
Cengage
Principles of Economics 2e
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax