Business, 26.03.2021 21:40 dontcareanyonemo

Suppose Tom, a UVA professor, wants to hire a research assistant to help him write papers. There are two pools to hire from: Virginia students and Virginia Tech students. If Tom procures LUV A hours of labor from UVA students and LV T hours of labor from Virginia Tech students, total research output will be Q = LUV A + LV T Virginia Tech students charge $20 per hour, while UVA students, being smarter, charge $30 per hour. Because Virginia Tech is far away, there is only one Virginia Tech student willing to work for Tom, and he is limited to working for 25 hours. There is no limit to the number of hours Tom can procure from UVA students.(1) Suppose Tom has a target output of Q papers. How many hours of labor from Virginia Tech students will he choose, and how many hours of labor from UVA students will he choose? (Your answer for each case should be a function of the target output Q.) (2) Solve for Tom's cost function C(Q). (3) What is Tom's average cost function AC(Q)? Plot this function. Are there economies of scale, diseconomies of scale, neither, or does the answer change for different values of Q? Explain.

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Suppose Tom, a UVA professor, wants to hire a research assistant to help him write papers. There are...