The Production Function for Buses - Edgeworth Box Assignment

The Production operation for Buses - Edgeworth Box - Assignment ExampleOur function entrust reproduce increasing returns to scale. This means that with an accumulation of occupation factors volume of produced goods will grow. To find a effect of buses with every combination of merchandise factors, it is necessary to replacing each number of employees and the number of machines for K and L indicators. Hence, if a number of machines are 14 and number of employees who make buses is 5, the calculation of production output will be the following In accordance with in a higher place example, we can calculate all the rest level of production. (K=10, L=3) (K=8, L=1) etc. From the give in, we can similarly see that in accordance with the accumulation of employees, the number of produced buses grows. Part (B) Make an Edgeworth box diagram for the production of buses in Utropica put the number of employees making buses on the horizontal axis (0 to 6), and a number of machines utilize t o make buses on the vertical axis (0 to 16). Draw an isoquant line for 5 buses. On the same diagram, jibe an isoquant for 7 buses, and an isoquant for 10 buses. To draw an Edgeworth box diagram for the production of a specific number of buses, it is infallible to find all combinations of factors that are able to create the stated level of production. Hence, using a table above, it can be seen that 5 buses can be produced by 10 machines and 1 employee or 8 machines and 2 employees. So there are several alternatives for this output. Consequently, finding all possible combinations, we receive points that will form the isoquant line on the diagram. Using the same method, we find combinations of the factors for producing 7 buses.