Purchase Solution

optimal level of production for the firm

Not what you're looking for?

Ask Custom Question

A firms output level is 3,000 units. Their market price for its output is $1.00 per unit. Their production function is q=10*K^.5L^.5
K is fixed at 225 hours and L is 400 hours. the hourly wage rate is $6 and hourly rental rate for K is $8.
Should the firm shutdown?

Purchase this Solution

Solution Summary

This posting calculates what is the optimal level of production for the firm.

Solution Preview

The cost of production is TC = K*r + w*L = 225*8 + 400*6 = 4200
Total Sales = 3000*1=3000
At current production level the firm is making losses.

To know what is the appropriate decision, let us ...

Purchase this Solution


Free BrainMass Quizzes
Economic Issues and Concepts

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

Basics of Economics

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

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

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

Elementary Microeconomics

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