Smiling Cow Dairy can sell all the milk it wants for $5 a gallon, and it can ren
ID: 1120293 • Letter: S
Question
Smiling Cow Dairy can sell all the milk it wants for $5 a gallon, and it can rent all the robots it wants to milk the cows at a capital rental price of $200 a day. It faces the following production schedule:
Number of Robots
Total Product
(Gallons)
In what kind of market structure does the firm sell its output?
Monopolistically competitive
Perfectly competitive
Oligopolistic
Monopolistic
In what kind of market structure does the firm rent robots?
Monopolistic
Monopolistically competitive
Perfectly competitive
Oligopolistic
Complete the following table by computing the marginal product and the value of the marginal product for each additional robot.
Number of Robots
Total Product
Marginal Product
Value of the Marginal Product
(Gallons)
(Gallons)
(Dollars)
The firm should rent ___ robots.
Number of Robots
Total Product
(Gallons)
0 0 1 60 2 100 3 135 4 155 5 170 6 180Explanation / Answer
In what kind of market structure does the firm sell its output?
- Perfectly competitive (firm is a price taker)
In what kind of market structure does the firm rent robots?
- Perfectly competitive
MP (nth unit) = TP (n units) - TP ((n-1) units)
VMP = MP x Price of milk
The firm should rent 2 robots. (where VMP = wage rate)
Number of Robots Total Product Marginal Product Value of the Marginal Product (Gallons) (Gallons) (Dollars) 0 0 1 60 60 300 2 100 40 200 3 135 35 175 4 155 20 100 5 170 15 75 6 180 10 50Related Questions
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