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2 years ago

Tony's Pizza's production function is shown in the table below.

Business

1 answer:

Nastasia [14]2 years ago

7 0

A technological efficiency is achieved, when a given output achieves the maximum possible output.

<h3>Why the pizzeria is technologically efficient?</h3>

a) Suppose Tony operates Plant 2. He hires 2 workers and produces 20 pizzas a day. Is the pizzeria technologically efficient? Why or why not?

The firm is not technologically efficient. The production function shows that with 2 ovens and 2 workers it is possible to produce 22 pizzas a day.

b) Suppose Tony operates Plant 1. He hires 2 workers and produces 18 pizzas per day. Is Tony's Pizza technologically efficient? Why or why not? Can Tony increase production to 22 pizzas a day in the short run? If yes, how?

Tony's Pizza technologically efficient. The production function shows that 18 pizzas is maximum output that 2 workers can produce with 1 oven. Tony can increase production to 22 pizzas per day in the short run by hiring more labor.

c) Suppose Tony operates Plant 3. What is the marginal product of labor when the fourth worker is hired? When operating Plant 3, does Tony experience diminishing marginal returns? Explain.

When the 4th worker is hired, the marginal product of labor is the change in output, 40 pizzas-33pizzas= 7 pizzas, divided by the change in the labor input, 1 worker. So, the marginal product of labor for the 4th worker is 7 pizzas per day.

Tony experiences diminishing marginal returns because the marginal product of labor diminishes as more workers are hired.

d) Suppose Tony currently uses Plant 3. Can he increase production from 40 to 50 pizzas per day in the short run? In the long run? If yes, how?

If Tony uses Plant 3, he cannot increase production from 40 to 50 pizzas per day in the short run. The short-run production function for plant 3 shows that the maximum output that the firm can produce with this plant is 48 pizzas per day.

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Answer:

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nothing really happens to the company when the stock options are granted, because unearned compensation is a contra equity account that reduces any increase in equity resulting from the stock options.

January 1, 2014, restricted shares are issued (market price $50 per stock)

Dr Unearned compensation 565,000

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Cr Additional paid in capital (stock options) 452,000

The company starts recording expenses as the vesting period is accrued.

December 31, 2014, one year of vesting period has passed

Dr Stock based compensation expense 113,000

Cr Unearned compensation 113,000

December 31, 2015, two years of vesting period have passed

Dr Stock based compensation expense 113,000

Cr Unearned compensation 113,000

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Dr Stock based compensation expense 113,000

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