1. Suppose that the output sells for $5 and the input sells for $4. Fill in theblanks in the following table.X inputY outputVMPAVP10502575408050852. In Problem 1, what appears to be the profit-maximizing level of input use?Verify this by calculating TVP and TFC for each level of input use as shownin the table.

The value of the marginal product (VMP) of good is given as the market value of an extra unit of…

Answered: 1. Suppose that the output sells for $5…

1. Suppose that the output sells for $5 and the input sells for $4. Fill in the blanks in the following table. X input Y output VMP AVP 10 50 25 75 40 80

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

1. Suppose that the output sells for $5 and the input sells for $4. Fill in the
blanks in the following table.
X input
Y output
VMP
AVP
10
50
25
75
40
80
50
85
2. In Problem 1, what appears to be the profit-maximizing level of input use?
Verify this by calculating TVP and TFC for each level of input use as shown
in the table.

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