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Calculating optimal level of input required

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Assume ZCorp has the following short run production function
Q = 50X - 2X^2
where X is the only variable input used by ZCorp to product its product, Q.

Because ZCorp sells its product in a perfectly competitive market, it can sell all the Q it produces for $25. The current market price for input X is $100.

How many units of X will ZCorp buy?

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Solution Summary

The solution describes the steps to calculate optimal level of input required.

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Q = 50X - 2X^2

Marginal Product of X=MPx=dQ/dX=50-4X

Marginal Revenue Product ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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