Managerial Economics

Before answering the following questions, review the checklist. Then, in a separate Word document, compose a paper consisting of a 450- to 500-word expository research essay answering the following questions, including computations, based on the rule for minimizing costs of production in regard to a small business plan to minimize costs in order to increase productivity and maximize profits.

The owner of Chloe’s Restaurant incurs various economic costs of production. Explain whether each of the following is an explicit cost or an implicit cost. Which of the two types of costs (explicit or implicit) should Chloe’s Restaurant minimize in order to maximize the account profit? 

Payments for rented manufacturing equipment.

A firm’s use of a warehouse that it owns and could rent to another firm.

1. Wages paid to the firm’s workers.

The wages the firm’s owner, Chloe, could earn if she worked for another company.

1. Consider the following information in the table for Chloe’s Restaurant and answer the questions below by using the cost minimization rule that takes into account the marginal product per dollar of inputs of production.
2. Item
3. Cost
4. Marginal Product of Capital

10,000

1. Marginal Product of Labor

500

Wage Rate

$15

Rental Price of Pizza Ovens

$600

Is the owner of Chloe’s Restaurant minimizing costs? Explain by computing marginal productivity per dollar using the data in the table.

To increase productivity and lower costs of production, should Chloe rent more ovens and hire fewer workers, or rent fewer ovens and hire more workers? Explain.

Your answer must consist expository research essay.

Consider Chloe’s Restaurant’s production decision in both the short run and long run. Chloe wants to improve the productivity of the firm in the long run. Explain the types of input costs that might be fixed in the short run and types of costs that may be variable in the long run. Provide examples for fixed inputs and variable inputs, as well as fixed costs and variable costs for the restaurant in the short run. What long-run economic decisions should Chloe make to increase productivity, minimize costs, and maximize profit?