The Blue-Steel Corporation supplies armored truck manufacturers with high-grade sheet metal panels that are used on the exterior of the vehicles. To make the panels, Blue-Steel uses two machines, which cost $15,000 each, and workers. These workers are available on the labor market for a salary of $55,000 each. The market price for one of Blue-Steel's metal sheet panel is $250 and the market is highly competitive.
a. Based on the information provided, calculate the missing values for Table 1.
a. What is the total fixed cost for Blue-Steel Corporation? Explain your calculation.
b. What is the profit-maximizing number of workers Blue-Steel should hire? Explain your answer.
c. What is the profit-maximizing output for Blue-Steel based on your calculations?
d. Construct an X-Y Scatter chart using the Workers, Total Output, and MP-Labor column data. At what point does the diminishing returns effect set in?
Step by step
Solved in 3 steps with 2 images
