1. BSA Manufacturing Sdn. Bhd. operates in a highly competitive market and its output is sold at RM10 per unit. The firm uses only 2 inputs, labour (L) and capital (K). L is the variable input and K is the fixed input. Table below shows the maximum amount of Good X that can be produced using different combinations of L and K. (a) (b) Units of capital (K) 5 Units of Good X 520 660 721 866 950 4 378 584 684 760 882 3 386 480 570 644 761 2 246 380 480 532 580 1 190 245 336 316 480 0 1 2 3 4 5 Units of Labour (L) Assume that the manufacturing department fixed the quantity of capital at 2 units and increased the labour from 1 unit to 5 units. Compute the total product, marginal physical product, average physical product and marginal revenue product for every level of labour used. If the cost of labour is RM1,000 per day, determine the optimal level of employment for the firm.
1. BSA Manufacturing Sdn. Bhd. operates in a highly competitive market and its output is sold at RM10 per unit. The firm uses only 2 inputs, labour (L) and capital (K). L is the variable input and K is the fixed input. Table below shows the maximum amount of Good X that can be produced using different combinations of L and K. (a) (b) Units of capital (K) 5 Units of Good X 520 660 721 866 950 4 378 584 684 760 882 3 386 480 570 644 761 2 246 380 480 532 580 1 190 245 336 316 480 0 1 2 3 4 5 Units of Labour (L) Assume that the manufacturing department fixed the quantity of capital at 2 units and increased the labour from 1 unit to 5 units. Compute the total product, marginal physical product, average physical product and marginal revenue product for every level of labour used. If the cost of labour is RM1,000 per day, determine the optimal level of employment for the firm.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter7: Proudction Costs
Section: Chapter Questions
Problem 9SQP
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Transcribed Image Text:1.
BSA Manufacturing Sdn. Bhd. operates in a highly competitive market and its output
is sold at RM10 per unit. The firm uses only 2 inputs, labour (L) and capital (K). L is
the variable input and K is the fixed input. Table below shows the maximum amount
of Good X that can be produced using different combinations of L and K.
(a)
(b)
Units of capital (K)
5
Units of Good X
520 660 721 866 950
4
378 584 684
760
882
3
386 480 570 644 761
2
246 380
480 532 580
1
190 245
336 316 480
0
1
2
3
4
5
Units of Labour (L)
Assume that the manufacturing department fixed the quantity of capital at 2
units and increased the labour from 1 unit to 5 units. Compute the total
product, marginal physical product, average physical product and marginal
revenue product for every level of labour used.
If the cost of labour is RM1,000 per day, determine the optimal level of
employment for the firm.
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