Purchase Solution

Marginal product vs maximizing output

Not what you're looking for?

Ask Custom Question

Kraft has a plant in the Alaska and Hawaii:
The wage in Alaska is $5.
The wage in the Hawaii is $20.
Marginal product of the last worker in Alaska is 100
Marginal product of the last worker in the Hawaii. is 500
(Size of the plants or the amount of capital equipment is unchangeable).

a. Is the firm maximizing output relative to its labor cost? Details.

b. If it is not, what should the firm do?

Purchase this Solution
Solution Summary

Marginal product vs maximizing output is shown.

Solution Preview

a. Is the firm maximizing output relative to its labor cost? Details.
In Alaska, MP1/W1 = 100/5 = 20
In Hawaii, MP2/W2 = 500/20 = ...

Purchase this Solution
Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

View More Free Quizzes
Related BrainMass Solutions

  • understanding microeconomic analysis

    The following covers various aspects of cost structures, revenue, and profit maximizing output decisions. Algebraic analysis is provided.

  • Analyzing the Given Cost Data

    What effect do you think that would have on the profit maximizing level of output? Illustrate you answer graphically. 9) Suppose the marginal revenue were to stay fixed at $9 a unit but the entire marginal cost curve shifts up.

  • Profit Maximization in Perfect Competition

    122590 Optimal Output in the short-run At a product price of $41 will this firm produce in the short run? Why or why not? If it is preferable to produce, what will be the profit- maximizing or loss-minimizing output? Explain.

  • Answers to 10 common Microeconomics final exam questions

    Average revenue vs. marginal revenue 4. Profit maximization 5. Advantages and disadvantages of monopolies 6. Market structure 7. Absolute advantage vs. comparative advantage 8. Quotas vs. tariffs 9. Marginal product of labor 10.

  • Profit maximizing pricing

    You can say a manager can use economic theory to maximize profit price for a service or a product by setting his price so that his output is equal the profit maximizing point.

  • Finding optimal output and price levels

    The profit maximizing output for your firm is C=40+5Q^2 Marginal cost=MC=dC/dQ=10Q Marginal Revenue=MR=50 (Marginal revenue is equal to price in case of perfect competition) Put MC=MR for profit maximization 10Q=50 Q=5 The profit maximizing

  • firm maximizing output

    Given current employment, the marginal product of the last worker in Mexico is 100, and the marginal product of the last worker in the U.S. is 500. a. Is the firm maximizing output relative to its labor cost? Show how you know. b.

  • Calculating marginal and average products, and Lerner Index

    For what range of output does this function have diminishing marginal returns? d. At what output is average product maximized? 2. Suppose the demand curve for a monopolist is QD= 500 - P, and the marginal revenue function is MR = 500 - 2Q.

  • firm's marginal revenue

    What can you say about the relationship between marginal revenue and marginal cost for output rates below the profit-maximizing (or loss-minimizing) rate? For output rates above the profit-maximizing (or loss-minimizing) rate?

View More Related Solutions