The UJava Espresso Stand Needs Two Inputs, Labor and Coffee

question 52

Multiple Choice

The UJava espresso stand needs two inputs, labor and coffee beans, to produce its only output, espresso. Producing an espresso always requires the same amount of coffee beans and the same amount of time. Which of the following production functions would appropriately describe the production process at UJava, where B represents ounces of coffee beans, and L represents hours of labor?

• A) Q = 0.5B + 0.5L^0.5.
• B) Q = B^0.80L^0.20.
• C) Q = min(2B, 60L).
• D) Q =+.
• E) None of the above.

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Definitions:

Incremental Analysis

The process of identifying the financial data that changes under alternative courses of action.

Fixed Overhead

Regular, ongoing costs that are not affected by the level of production or sales, such as rent, salaries, and insurance.

Direct Materials

Raw materials directly used in the manufacturing of a product, which are easily traceable to the finished product.

Incremental Profit

The additional profit that is generated by undertaking a particular action, such as producing an additional unit of product.