Answer to Question #176221 in Macroeconomics for Crispin Bapuuroh

Question

you are the 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 sell for $12 each. given this information, optimize your human resource and production decisions. do you anticipate earning a profit or loss?

Answer 1

The mirror and window supplier is a profit-maximizing firm that will hire labor up to the point where the value of its marginal product equals the wage rate of $60. There'll are currently 8 units of capital available at the plant.

Firm’s demand for labor is the only decision that the firm is conscious about. Given the wage rate of $60 per unit of labor, the firm will continue to hire labor till the value of marginal product of labor reaches $60.