Paul\'s Performance Pizza is a smallrestaurant that sells low-carbohydrate pizza
ID: 1250486 • Letter: P
Question
Paul's Performance Pizza is a smallrestaurant that sells low-carbohydrate pizzas in a health-conscioustown. Paul's very tiny kitchen barely has enough room for the twoovens in which his workers bake the pizzas. Paul is under contractto pay the rent for the two ovens for the next year. Because ofthis, and the fact that Paul's kitchen cannot fit more than twoovens, Paul cannot change the number of ovens he uses in hisproduction of pizzas.
Paul's production function is presented in the table below. Use itto answer the following questions.
LaborInput TotalOutput (Number ofworkers) (Pizzas perday) 0 0 1 60 2 100 3 130 4 150 5 160
Explanation / Answer
Workers are variable and the ovens are fixed. He can always layoff or hire new workers but no matter what happenshe still has to be paying rent on the ovens.