# Profits

17. Using the following table, consider the following: This firm rents its capital for $75 per hour. Its output (Q) is in terms of output per hour. The firm pays its employees $15 per hour.

Capital Labor Output Marginal Value of the

Product of Marginal Product

Capital of Capital

K L Q MP of K VMP of K

0 20 0

1 20 50 50 $100

2 20 150 100 200

3 20 300

4 20 400

5 20 450

6 20 475

7 20 475

8 20 450

9 20 400

10 20 300

11 20 150

a. Complete the table for the MP or K and the Value of the Marginal Product of K.

b. At what point does the firm produce (how many pieces of capital does it rent)?

c. What profit does this efficient firm make?

See attached file for full problem description.

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#### Solution Preview

See the attached file.

a. Complete the table for the MP or K and the Value of the Marginal Product of K.

Please see the EXCEL for calculation.

MPK= dQ/dK

VMPK = MPK * 20

where 20 is given by ...

#### Solution Summary

Profits are examined in this post.