Answer to Question #248618 in Economics for Indira

Question

Question 3 (20)

Capital (k) MPK (Marginal Product of

Labour (L)

(6) (4)

  MPL (Marginal Product of Labour)

1 24 1 11 2 21 2 9

3 18 3 8

4 15 4 7 5956 6664 7371

8 1 8 0.5

Hint: MP = ∆TPP/∆Q

Least cost combination:

Profit maximising combination:

Capital) 0-0-

                     

MRP =∆TR/∆Q = MRP*P

Use the information from the Table above. In a perfectly competitive market, capital costs N$3 per unit and labour costs N$1 per unit. Product price is N$1.

a) What is the least cost combination of labour and capital the firm should use for producing 80 units of output?

b) What is the profit-maximizing combination of labour and capital?

c) What is the level of output?

d) What is the economic profit?

e) Is this the least costly way to produce the profit maximizing output? (product price is N$1) 

Answer 1

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