Assignment – Your HR Manager comes to you about an employee

Paper , Order, or Assignment Requirements

SECTION OVERVIEW: Chapters 8 and 9 provide the theoretical analysis of firm production; how
much output the firm is able to produce and at what cost. The cost curves achieve two
purposes: it provides a simple representation of how the production process behaves, and the
few curves within it give us important information about fixed and variable expenses as well
as marginal cost (which will be used in optimal decision-making). Chapter 8 describes shortrun production and cost, and 9 describes long-run production and cost.
LEARNING GOALS: Upon completing this section, we will understand why economists
differentiate between the short run and the long run, and how this impacts firm decision
making. We will recognize the relationship between a firm’s production and its costs, and be
able to construct and interpret the various production and cost curves. We will develop tools
of long-run optimization (isoquants and isocost lines). Finally, we will utilize some of our
earlier tools (regression, calculus) in analyzing these topics.
1. Your HR Manager comes to you about an employee whose performance reviews have been
declining recently, and asks your advice about whether to keep the employee or let him go.
To provide some balance, the manager mentions that the company has spent a considerable
amount of time and effort in training this employee on company-specific procedures and that,
in the manager’s words, “it would be a shame to let that money go to waste.” How would you
respond?
2. You have collected the following data on output and total variable costs:
Q
1
2
3
4
5
6
7
8
9
10 a
b
c
d
e TVC ($)
50
100
140
170
190
200
220
250
290
340 Identify the range of output exhibiting increasing returns (increasing MP), and the range
exhibiting diminishing returns (decreasing MP).
Current fixed costs for the company equal $150. Draw two graphs, both with Q on the
horizontal axis: one graph shows TVC and TC, and the other shows AVC, AC, and MC.
Suppose that the government imposes a $30 property tax hike on all businesses; how will
that affect your two graphs; i.e., which cost curves will be affected and how?
Suppose instead that the government considers your production process to be polluting,
and imposes a $7 tax per unit produced. How does this tax increase compare to the
property tax increase, in terms of the effect on your company’s cost curves?
Your boss says “either of these taxes is going to force us to change our production
levels.” Given what you know about optimization analysis, how would you respond?

3. Your work for a company that supplies parts to a manufacturer, and have a standing order to
produce 5,400 parts per day. You currently hire employees at $50 per day, and each additional
employee produces 200 more parts per day (i.e., MP is constant and equal to 200).

Your company is considering implementing one new machine that can produce 3,000 more parts
per day at a cost of $600 per day.

a. Would your company save money in the production of the 5,400 parts by purchasing the
new machine and reducing its demand for labor?
b. After news of the technologically-advanced machine spreads, along with news of fastfood automated kiosks replacing human employees, your employees improve their
performance such that each additional employee now produces 300 more parts per day
(MP is constant and equal to 300). If the other values remain the same (wage is $50,
machine is $600 and machine’s output is 3,000), would the company save money in the
production of the 5,400 parts by purchasing the machine and reducing labor demand?

4. You work for a company that is being accused of monopoly behavior, given its large size.
Comparisons are made to the industry standard, where each establishment has on average
about 16.2 employees. Your company is bigger than that, but you want to provide evidence
against the monopoly charges.
a. You’ve collected data at different times in your company’s history, when you had
different amounts of capital.
In 2003, SRATC = 2.5Q2 – 61Q + 480
In 2008, SRATC = 2.5Q2 – 16Q + 150
In 2014, SRATC = 2.5Q2 – 40Q + 250
Plot these three different SRATC curves (have Q go from 0 to 20), and discuss how (and
possibly why) your company has changed since 2003 in terms of its size.
b. Make another column labeled “LRATC” that includes three points: 2008’s SRATC when
Q = 1; 2014’s SRATC when Q = 8, and 2003’s SRATC when Q = 15. Plot these three
points on your graph (be sure to show, don’t hide, the dots) and add a 2 nd-degree
polynomial trendline to represent your company’s LRATC.
c. In a more competitive industry with smaller firms, typical LRATC curves follow LRATC
= 6Q2 – 36Q + 147. Using all available information in this question, present an argument
that could be used to justify your company’s size.

We are always aiming to provide top quality academic writing services that will surely enable you achieve your desired academic grades. Our support is round the clock!

Type of paper Academic level Subject area
Number of pages Paper urgency Cost per page:
 Total: