RS Inc. sell a product for P2 per unit in a highly competitive market. The firm produces output using capital (which it rents at P75 per hour) and labor (which is paid a wage of
RS Inc. sell a product for P2 per unit in a highly competitive market. The firm produces output using capital (which it rents at P75 per hour) and labor (which is paid a wage of
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
RS Inc. sell a product for P2 per unit in a highly competitive market. The firm produces output using capital (which it rents at P75 per hour) and labor (which is paid a wage of P15 per hour under a contract for 20 hours of labor services). Complete the following table and use that information to answer the questions that follow.
|
K |
L |
Q |
MPK |
APK |
APL |
|
0 |
30 |
0 |
|
|
|
|
1 |
30 |
50 |
|
|
|
|
2 |
30 |
150 |
|
|
|
|
3 |
30 |
300 |
|
|
|
|
4 |
30 |
400 |
|
|
|
|
5 |
30 |
450 |
|
|
|
|
6 |
30 |
450 |
|
|
|
|
7 |
30 |
400 |
|
|
|
- Identify the fixed and variable inputs.
- What are the firm’s fixed costs?
- What is the variable cost of producing 475 units of output?
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