View the step-by-step solution to:


A firm's product sells for $4 per unit in a highly competitive market. The firm produces output using capital

(which it rents at $25 per hour) and labor (which is paid a wage of $30 per hour under a contract for 20 hours of labor services). Complete the following table and use that information to answer the questions that follow.10996-5-2CCQEI1.png

a. Identify the fixed and variable inputs.

b. What are the firm's fixed costs?

c. What is the variable cost of producing 475 units of output?

d. How many units of the variable input should be used to maximize profits?

e. What are the maximum profits this firm can earn?

f. Over what range of the variable input usage do increasing marginal returns exist?

g. Over what range of the variable input usage do decreasing marginal returns exist?

h. Over what range of input usage do negative marginal returns exist?


Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes