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# Question 1 In the table below are the marginal-product and marginal-revenue-product schedules for resource A and resource B. Both resources are...

I need help with these questions. For question number one I have answered (b) and (c) but I am having a hard time with (a).

If (a) could be explained for question one that would be great.

Also I am having trouble with question two for a, b, and c. If you could explain perpetuity bonds and interest rates that would be also great!

I have attached a file for review.

Question 1 In the table below are the marginal-product and marginal-revenue-product schedules for resource A and resource B. Both resources are variable and are employed in purely competitive markets. The price of A is \$1 and the price of B is \$2. Quantity of  resource A  employed Marginal  product of A Marginal revenue  product of A Quantity of  resource B  employed Marginal  product of B Marginal revenue  product of B 1 20 \$5.00 1 20 \$5.00 2 16 4.00 2 18 4.50 3 12 3.00 3 16 4.00 4 10 2.50 4 12 3.00 5 8 2.00 5 8 2.00 6 4 1.00 6 6 1.50 7 2 .50 7 4 1.00 (a) What is the least-cost combination of resources A and B that would enable the firm to product 120 units of output? (b) What is the profit-maximizing combination of A and B? (c) What is total output and profit when the firm is employing the profit-maximizing combinations of A and B? Answers (a) ??? (b) Use the formula MRP A /P A =MRP B /P B = 1. In this data, profit is maximized by employing 6 units of A and 5 units of B. To check: (\$1.00/\$1.00) = (\$2.00/\$2.00) = 1. (c) Total output is 144 units. The total cost of resources is \$16[(\$1 X 6) + (\$2 X 5)]. The total revenue is \$36(144 X \$0.25). Total profit is \$20. Question 2 A perpetuity is a bond that pays an amount per year forever. If a perpetuity pays \$5 per year: (a) What would the annual interest rate be if an investor paid a \$50 perpetuity? (b) What would be the annual interest rate if an investor paid \$200? \$600? Bonds are known as "fixed income" securities because the future payments that they will make to investors are fixed by the bond agreement in advance. (c) Do the interest rates of bonds and other investments that offer fixed future payments vary positively or inversely with their current prices? Sign up to view the entire interaction

Here is the solution... View the full answer Question 1
In the table below are the marginal-product and marginal-revenue-product schedules
for resource A and resource B. Both resources are variable and are employed in
purely competitive...

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