Answer to Question #175704 in Macroeconomics for Rebecca Ohene Danso

Question

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 summarized below, and are based on the eight units of capital currently 

available at your plant. Workers are paid $60 per unit, per unit capital costs are $20, and 

your encapsulated windows sells for $12 each. Given this information, optimize your 

human resource and production decisions. Do you anticipate earning a profit or loss? 

Explain carefully.

Labor 

Output 

1

10

2

30

3

60

4

80

5

90

6

95

7

95

8

90

9

80

10

60

11

30

Answer 1

Solution:

The human resource and production decisions that the company should make are as follows:

• The company should hire 5, or 6 employees.
• The company should produce an output of between 90 and 95 in order to maximize profits.

The company is anticipated to make more profits and fewer losses according to its labor and output production levels. The maximum profit the company will make is $620, while the maximum loss will be $460.

The calculations are shown below: