Bus 640 Production Cost Analysis

1. Jennifer Trucking Company operates a large rig transportation business in Texas that transports locally grown vegetables to San Diego, California. The company owns 5 large rigs and hires local drivers paid fixed salaries monthly, regardless of the number of trips or tons of cargo that each driver transports each month. The below table presents details about the number of drivers and the total cargo transported by the company at different staff levels. Drivers employedTotal Cargo Transported (tons)Marginal cargo1 2 3 4 5 6 7 85 12 21 32 40 46 51 505 7 9 11 8 6 5 -1 a. Which inputs are fixed and which are variable in the production function of Jennifer Trucking Company Over what ranges do there appear to be increasing, constant and/or diminishing returns to the number of drivers employed Fixed inputs are those that dont change with amount of cargo. If we consider 1 month as the short run then driver salary is fixed. For a longer period it become variable as a driver may / may not be retained next month. Other expenses for the operation of the rig are fixed. Returns to drivers are based on additional cargo handled by them.