332 selected chapter 7 solutions

332 selected chapter 7 solutions - ST7.1 SOLUTION A. The...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
ST7.1 SOLUTION A. The rule for an optimal combination of Testlogic-1 (T) and Accutest-3 (A) equipment is This rule means that an identical amount of additional output would be produced with an additional dollar expenditure on each input. Alternatively, an equal marginal cost of output is incurred irrespective of which input is used to expand output. Of course, marginal products and equipment prices must both reflect the same relevant time frame, either hours or months. B. On a per hour basis, the relevant question is 27 $18,000/(25 x 8) = ? 48 $32,000/(25 x 8) 0.3 = _ 0.3 On a per month basis, the relevant question is 27 x (25 x 8) $18,000 = ? 48 x (25 x 8) $32,000 0.3 = _ 0.3 In both instances, the last dollar spent on each machine increased output by the same 0.3 units, indicating an optimal mix of testing machines. C. The rule for optimal input employment is T A T A MP MP = P P
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
MRP = MP Η MR Q = Input Price This means that the level of input employment is optimal when the marginal sales
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

332 selected chapter 7 solutions - ST7.1 SOLUTION A. The...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online