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Chase Inc., provides exterminator services to residences




Chase Inc., provides exterminator services to residences in the Miami area. The primary resources Chase employs are skilled exterminators and large dome/air pumps used to cover the homes, pump in insecticide, and minimize leakage to the environment. Currently, Chase employs 10 exterminators at a cost of $15 per hour, employs 2,000 hours of pump time each week at a cost of $3 per hour. Each exterminator works a 40-hour week. This level of employment allows SPC to complete 100 treatments per week for which the firm receives $100 each.;A. Assuming that both returns to factors and returns to scale are constant, what are the marginal products for (1) exterminators and (2) gallons of chemicals?;B. Is SPC employing labor and domes in an optimal ratio, assuming that substitution of the resources is possible? Explain.;C. Determine the marginal revenue products for exterminators and for the domes/pumps employed by SPC. (Assume constant returns to factors in part A.);D. Is SPC employing an optimal (profit-maximizing) quantity of labor and computer time? Explain.


Paper#24676 | Written in 18-Jul-2015

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