Use the following information towork Problem 6.The table shows the productionfunction of Bonnie's BalloonRides. Bonnie's pays $500 a dayfor each balloon it rents and $25a day for each balloon operator ithires.Labor(workersper day)1020304050BalloonsPlant 16101315161Output(rides per day)Plant 210151820212Plant 338222313182425Plant 415122222024262746.a. Graph the ATC curves for Plant 1 and Plant 2. Explain why these ATC curves differ.6.b. Graph the ATC curves for Plant 3 and Plant 4. Explain why these ATC curves differ.6.c. On Bonnie's LRAC curve, what is the average cost of producing 15 rides and 18 rides a day?6.d. Explain how Bonnie's uses its long-run average cost curve to decide how many balloons to rent.

Production Function:A production function is a mathematical equation or graphical representation…

Use the following information to work Problem 6. The table shows the production function of Bonnie's Balloon Rides. Bonnie's pays $500 a day for each balloon it rents and $25 a day for each balloon operator it hires. Labor (workers per day) 10 20 30 40 50 Balloons Plant 1 6 10 13 15 16 1 Output (rides per day) Plant 2 10 15 18 20 21 2 Plant 3 13 18 22 24 25 3 Plant 4 15 20 524274 26 6.a. Graph the ATC curves for Plant 1 and Plant 2. Explain why these ATC curves differ. 6.b. Graph the ATC curves for Plant 3 and Plant 4. Explain why these ATC curves differ. 6.c. On Bonnie's LRAC curve, what is the average cost of producing 15 rides and 18 rides a day? 6.d. Explain how Bonnie's uses its long-run average cost curve to decide how many balloons to rent.

Use the following information to work Problem 6. The table shows the production function of Bonnie's Balloon Rides. Bonnie's pays $500 a day for each balloon it rents and $25 a day for each balloon operator it hires. Labor (workers per day) 10 20 30 40 50 Balloons Plant 1 6 10 13 15 16 1 Output (rides per day) Plant 2 10 15 18 20 21 2 Plant 3 13 18 22 24 25 3 Plant 4 15 20 524274 26 6.a. Graph the ATC curves for Plant 1 and Plant 2. Explain why these ATC curves differ. 6.b. Graph the ATC curves for Plant 3 and Plant 4. Explain why these ATC curves differ. 6.c. On Bonnie's LRAC curve, what is the average cost of producing 15 rides and 18 rides a day? 6.d. Explain how Bonnie's uses its long-run average cost curve to decide how many balloons to rent.

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

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