rm uses machines, labor and output to produce output. Labor is a variable input and costs he hours of labor required to produce a given amount of output if given in the table below. he other variable input is materials. Each extra unit of output requires $10 worth of materials he quantity of machines is fixed. The firm must pay $500 for the machines and doesn't want t amber of machines in the short or long run.
rm uses machines, labor and output to produce output. Labor is a variable input and costs he hours of labor required to produce a given amount of output if given in the table below. he other variable input is materials. Each extra unit of output requires $10 worth of materials he quantity of machines is fixed. The firm must pay $500 for the machines and doesn't want t amber of machines in the short or long run.
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter7: Production, Inputs, And Cost: Building Blocks For Supply Analysis
Section: Chapter Questions
Problem 1DQ
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Transcribed Image Text:A firm uses machines, labor and output to produce output. Labor is a variable input and costs $25 an hour.
The hours of labor required to produce a given amount of output if given in the table below.
The other variable input is materials. Each extra unit of output requires $10 worth of materials.
The quantity of machines is fixed. The firm must pay $500 for the machines and doesn't want to change the
number of machines in the short or long run.
Output Hours needed
1
2
3
4
5
6
7
8
9
10
11
10
18
23
25
30
37
46
61
77
96
117
(a) Suppose that machines are fixed in the short-run. What is the minimum price at which it will supply the
a positive quantity of the good?
(b) Create a table with the information about for the firm's short-run supply of the good.
(c) What is the minimum price at which the firm will earn non-negative economic profits?
(d) What is the elasticity of supply when the price is $ 410?
(e) The price of a complementary good decreases. What would you expect to happen to the firm's output?
Explain.
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VIEWStep 4: Answer - B ((information table about for the firm's short-run supply of the good.)
VIEWStep 5: Answer - C ( Calculation of lowest price at which it will eventually supply the commodity)
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