Douffelberry Juice Is a Mild Intoxicant, Prized for Facilitating Conversation

Douffelberry juice is a mild intoxicant, prized for facilitating conversation among university administrators but not otherwise valued. The berry does not travel well,so it must be squeezed on the farm where it is grown.Baskets of berries, B, are produced using ounces of seeds, S, and hours of labor, L, according to a production function B = . Gallons of juice, J, are made from baskets of berries and hours of labor according to the production function J = min{B, L}. If seeds cost $9 per ounce and labor costs $9 per hour, what is the cost of producing each gallon of douffelberry juice?

A) $27
B) $54
C) $9
D) $18
E) Since there are not constant returns to scale, the cost per gallon depends on the number of gallons produced.

Correct Answer:

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