7.The cost of flying a passenger plane from point A to point Bis$50,000.Th airline flies this route four times per day at 7am,10am,Ipm,and 4pm The first and last flights are filled to capacity with 240 people.The second and third flights are only half full.Find the average cost per passenger for each flight. Suppose the airline hires you as a marketing consultant and wants to know which type of customer it should try to attract,the off-peak ustomer (the middle two flights)or the rush-hour customer(the first and last flights).What advice would you offer? The average cost per passenger is $50.000/240 for the full flights and $50,000/120 for the half full flights.The airline should focus on attracting more off-peak customers in order to reduce the average cost per passenger on those cost per pass enger is already minimized for the two peak 8.You manage a plant that mass produces engines by teams of workers using assembly machines.The technology is summarized by the production function. q=5 KL where g is the number of engines per week,K is the number of assembly machines,and L is the number of labor teams.Each assembly machine rents forr$10.000 per week and each team costsw$5.000 per week.Engine costs are given by the cost oflabor teams and machines,plus $2,000 per engine for raw materials.Your plant has a fixed installation of 5 assembly machines as part of its design. a.What is the cost function for your plant-namely,how much would it cost to produce g engines?What are average and marginal costs for producing g engines?How do average costs vary with output? implies that for any level of output the number of labor teams hired will be The total cost function tuiven by the sm of the oof apita labor,and raw materials: Tcg=k+wL+200g=(10.0006+5.00r号+2.000g TCg)=50,000+2200g The average cost function is then given by: AC(q)=TC4_50.00+200g 9 and the marginal cost function is given by:7. The cost of flying a passenger plane from point A to point B is $50,000. The airline flies this route four times per day at 7am, 10am, 1pm, and 4pm. The first and last flights are filled to capacity with 240 people. The second and third flights are only half full. Find the average cost per passenger for each flight. Suppose the airline hires you as a marketing consultant and wants to know which type of customer it should try to attract, the off-peak customer (the middle two flights) or the rush-hour customer (the first and last flights). What advice would you offer? The average cost per passenger is $50,000/240 for the full flights and $50,000/120 for the half full flights. The airline should focus on attracting more off-peak customers in order to reduce the average cost per passenger on those flights. The average cost per passenger is already minimized for the two peak time flights. 8. You manage a plant that mass produces engines by teams of workers using assembly machines. The technology is summarized by the production function. q = 5 KL where q is the number of engines per week, K is the number of assembly machines, and L is the number of labor teams. Each assembly machine rents for r = $10,000 per week and each team costs w = $5,000 per week. Engine costs are given by the cost of labor teams and machines, plus $2,000 per engine for raw materials. Your plant has a fixed installation of 5 assembly machines as part of its design. a. What is the cost function for your plant — namely, how much would it cost to produce q engines? What are average and marginal costs for producing q engines? How do average costs vary with output? K is fixed at 5. The short-run production function then becomes q = 25L. This implies that for any level of output q, the number of labor teams hired will be  L = q 25 . The total cost function is thus given by the sum of the costs of capital, labor, and raw materials:  TC(q) = rK +wL +2000q = (10,000)(5) + (5,000)( q 25 ) + 2,000 q TC(q)= 50,000 +2200q. The average cost function is then given by:  AC(q) = TC(q) q = 50,000 + 2200q q . and the marginal cost function is given by: