Question: 5. Worldwide, processing raw sugarcane into sugar involves two inputs, capital (measured in value of machinery) and labor (measured in worker hours). In Brazil, the

5. Worldwide, processing raw sugarcane into sugar involves two inputs, capital (measured in value of machinery) and labor (measured in worker hours). In Brazil, the top sugarcane processing country in the world, the typical sugarcane production process faces the following production function: = 50 + 5

The average price of labor is R$6.60 per hour and the price of capital is R$14.00 per unit.

A. If a company wants to process 10,000 pounds of sugarcane, how much labor and capital should they use?

B. What kind of returns to scale does this production function have?

C. In Thailand, a smaller producer of sugarcane than Brazil, production of sugar faces the following cost curve per million pounds of raw sugarcane produced:

= 18 3.5 + 0.21²

Assuming that global demand is 600 million pounds, how many firms would be needed to satisfy global demand if we assume that every firm produced at MES?

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