Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Chapter 5, Problem 15PAA
To determine
To find: The decision for input and output and check the
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You are a manager at Glass Inc.—a mirror and window supplier. Recently, you conducted a study of the production process for your single-side encapsulated window. The results from the study are summarized in the following table and are based on the 8 units of capital currently available at your plant. Each unit of labor costs $60, each unit of capital is $20, and your encapsulated windows sell for $12 each. Given this information, what is your optimal labor and output decision?
Suppose you manage a business that produces high-end dog food. The business produces 3,000 dog food cans per day, and can sell each can at $2.00/can regardless of how much is produced. Your firm currently employs 20 workers, each of whom earns $15/hour and work 8 hours per day. Inputs, like the meat for the food and the metal for the can, cost $1.00/can. Your overhead expenses, including rent, property taxes, insurance, etc., which does not vary with the number of cans produced, equals $250 per day.
a. (3) Calculate your company’s current daily profit.
You’re considering whether to hire additional workers to produce additional cans. Each worker would be paid $15/hr. and material costs remain constant at $1.00/can. You estimate the 21st employee would produce an additional 200 cans per day, and the number of additional cans from each additional worker would be decreasing by 40 (a 22nd employee could produce an additional 160 cans per day, a 23rd employee could produce an additional…
You are a manager at Glass Incorporated—a mirror and window supplier. Recently, you conducted a study of the production process for your single-side encapsulated window. The results from the study are summarized in the following table and are based on the 8 units of capital currently available at your plant. Each unit of labor costs RM 60, each unit of capital is RM 20, and your encapsulated windows sell for RM 12 each.
Labor L
Capital K
Output Q
Marginal Product of Labor MPL
Average Product of Labor APL
Average Product of Capital APK
Value Marginal Product of Labor VMPL
0
8
0
1
8
10
2
8
30
3
8
60
4
8
80
5
8
90
6
8
95
7
8
95
8
8
90
9
8
80
10
8
60
11
8
30…
Chapter 5 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
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