Making a production function.

1. Explain what is meant by a production function.
2. Distinguish between returns to scale and returns to a factor.
3. Create a graphical analysis of the cost-minimizing input mix and explain how it
is affected by changes in relative prices of inputs.
4. Define and describe the relationship among total, marginal, and average costs.
5. Describe the connection between production and cost functions.
6. Distinguish between short- and long-run costs curves.
7. Define fixed and variable costs and their role in decision making.
8. Explain long-run costs, sources of economies and diseconomies of scale and
scope, and the notion of minimum efficient scale.
9. Explain why MR = MC at the profit maximizing output.
10. Understand how many units of a factor (such as labor) a firm should purchase
at different factor prices.

Sample Answer

In economics, the term production function is immensely used to imply the correlation that exist between the maximum amount of output that can be obtained from a given amount of input. In other words, the production function describes the existing boundary between the obtained output from each feasible combination of output. Organizations and firms employ this concept to determine how much output they should produce given the price of a good and what kind of input they should use to produce.

Gacy strangled the boy before stuffing the body in his closet before burying him (Cahill 349).

In 1975, Gacy’s business was growing quickly and his appetite for young men grew with it. Gacy often lured young men under his employment to his house, convincing them to put themselves in hand cuffs, and raping and torturing them before strangling them (Cahill 169-170). Most of Gacy’s murders took place between 1976 and 1978, the first of this time taking place in April 1976. Many of the youths that were murdered during this time were buried in a crawl space under Gacy’s house. For the remainder of the murders, Gacy admitted to throwing five bodies off the I-55 bridge into the Des Plaines River; however, only four of the bodies were ever recovered (Linedecker 152).

In December 1978, Gacy meets Robert Jerome Piest, a 15-year old boy working at a pharmacy and offers him a job at Gacy’s firm. Piest informs his mother of this and fails to return that evening. The Piest family files a missing person’s report and the pharmacist informs police that Gacy would most likely be the man that Jerome spoke to about a job. When questioned by the police, Gacy denied any involvement in Piest’s disappearance. However, the police were not convinced, and Gacy’s history of sexual abuse and battery prompted the police to search his house. Among the items found at Gacy’s house were a 1975 high school class ring with the initials J.A.S., multiple driver’s licenses, handcuffs, clothing that was too small for Gacy, and a receipt for the pharmacy that Piest had worked at. Over the course of the next few days, investigators received multiple calls and tips about Gacy’s sexual assaults and the mysterious disappearances of Gacy’s employees. The class ring was eventually traced back to John A. Szyc, one of Gacy’s victims in 1977. Futhermore, upon examining Gacy’s car, investigators discovered a small cluster of fibers resembling human hair, which were sent to the labs for further analysis. That same evening, search dogs were used to detect any trace of Piest in Gacy’s car, and one of the dogs