You are a manager at Glass Inc.—a mirror and window supplier. Recently, you cond
ID: 1189402 • Letter: Y
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 are summarized in the table below and are based on the 8 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, what is your optimal labor and output decision?
Labor:
Output:
Given these decisions, what will be your profit?
$
(1)
(2)
(3)
Labor
L
Capital
K
Output
Q
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
(1)
(2)
(3)
Labor
L
Capital
K
Output
Q
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
Explanation / Answer
The following table shows total reveneu, total cost, narginal revenue an dmarginal cost at each level of output. The optimal point will be where MR = MC. This happens at MR=MC=60, at this point quantity is 95. Therefore optimal labor input level is 6 labors and output level 95 units.
Labor Capital Output L K Q TR(PQ) MR TC(60L+20K) MC 0 8 0 0 160 1 8 10 120 120 220 60 2 8 30 360 240 280 60 3 8 60 720 360 340 60 4 8 80 960 240 400 60 5 8 90 1080 120 460 60 6 8 95 1140 60 520 60 7 8 95 1140 0 580 60 8 8 90 1080 -60 640 60 9 8 80 960 -120 700 60 10 8 60 720 -240 760 60 11 8 30 360 -360 820 60Related Questions
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