Explore BrainMass
Share

Explore BrainMass

    Marginal Cost Problem

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    1. Assume a manufacturing process can be captured by the following production function:

    Q = 5,000 + 100X - 0.5X2

    Where Q is the number of units of output produced weekly and X is the variable input used in the production process. Assume further that the cost of each unit of input X used is $100 (marginal factor cost, MFC = $100) and that the marginal revenue of each unit sold of output Q is constant at $2.00 (so that P = MR = $2.00).

    a) What is the marginal product of input X?

    b) What is the expression for the marginal revenue product of input X (MRPX)?

    c) Using the rule for optimal resource utilization, what is the optimal amount of input X to use in the production process?

    © BrainMass Inc. brainmass.com October 9, 2019, 10:50 pm ad1c9bdddf
    https://brainmass.com/economics/factors-of-production/marginal-cost-problem-233984

    Solution Preview

    a) What is the marginal product of input X?

    MPx = dQ/dX = 100 - X

    b) What is the expression for the marginal revenue ...

    Solution Summary

    The rule for optimal resource utilization is applied.

    $2.19