C5_ReviewQuestions_2010-02-23

C5_ReviewQuestions_2010-02-23 - The following table...

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Review Questions for Chapter 5 – Production ECON 303 Managerial Economics, Spring 2010 Edward L. Millner , Department of Economics Copyright Millner 2009-10 R5.1 The A-1 Corporation supplies airplane manufacturers with preformed sheet metal panels that are used on the exterior of aircraft. Manufacturing these panels requires only five sheet metal-forming machines, which cost $300 each, and labor. These workers can be hired on an as-needed basis in the labor market at $7,000 each. Given the simplicity of the manufacturing process, the preformed sheet metal panel market is highly competitive. Therefore, the market price for one of A-1’s panels is $50.
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Unformatted text preview: The following table contains production data. Sheet Metal-Forming Machines Labor Number of Panels Produced MP L AP L VMP L 5 5 1 600 5 2 1,000 5 3 1,290 5 4 1,480 5 5 1,600 5 6 1,680 a. Fill in the table. MP L is the marginal product of labor, AP L is the average product of labor, and VMP L is the value marginal product of labor. b. How much labor should the firm employ to maximize profit? L = ___________ c. What is the maximum profit? = ________________ Print this sheet and record your answers on the printout, and bring the printout with your answers to class on Thursday....
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