Question

1.Susan manages a library. She has found that 1 highly skilled reference librarian (S) is able to assist 15 patrons per hour, and untrained reference librarians (U) are able to assist only 5 patrons per hour. a.Write Susan’s product function, where output is measured in number of patrons assisted, and graph an isoquant. b.Derive Susan’s cost function, C(wS, wU, q). c.Suppose the hourly wage for a highly skilled librarian (wS) is $30 and the hourly wage for an untrained reference librarian (wU) is $8.50. Graph an isocost given these prices. d.Susan has been hired to assist 150 library patrons. What is the most efficient mix of highly skilled and untrained librarians she should employ given the wage rates above? How much will it cost Susan to assist 150 patrons? e.Under what conditions would Susan alter her choice of inputs?

Answer 1

(a) Susan's Production function is: q = 15S+5U.

(b) Susan's Cost function is:

(d) given the wage rate Susan will emplo only Untrained librarians to assist 150 patrons because

cost to assist them would be =

(e) Susan would alter choice of inpuuts when