Charles runs a surfing school on the North Shore of Oahu. He has two inputs: sur
ID: 1210505 • Letter: C
Question
Charles runs a surfing school on the North Shore of Oahu. He has two inputs: surfboards, which he rents from a local shop for $10 per day, and surfing instructors, whom he hires for $40 per day. Charles has figured out that the marginal physical product (MPP) of the last instructor hired is 16 lessons, and the MPP of the last board used is 3 lessons. Which of the following statements is correct? Charles could lower his costs without reducing his output if he employed more instructors and used fewer surfboards. Charles could lower his costs without reducing his output if he employed fewer instructors and used more surfboards. Any of these answers may be right, depending on the price of a lesson. Charles currently employs a cost-minimizing combination of surfboards and instructors. Marvin's Milk Farm produces milk and sells it in a perfectly competitive market at $3 per bottle. The following table shows Marvin's weekly total and marginal product schedules, using labor and capital. Assume that labor and capital may be used independently; that is, one is not needed for the other factor to be productive. Therefore, the total amount of milk that Marvin's produces is obtained by adding together the amount of milk produced by labor and the amount of milk produced by capital. The table also shows total revenue and marginal revenue products (MRP) of labor and capital. Finally, assume that Marvin's Milk Farm is a factor price taker in the labor and capital in markets. Labor costs $36 per week, and capital costs $72 per If Marvin's Milk Farm wants to produce 70 bottles of milk per week, the least-cost combination of labor and capital is_____labor and_____of capital. The profit-maximizing combination of resources is______labor and______capital. The profit-maximizing combination contains______the least-cost combination to produce 70 bottles of milk.Explanation / Answer
3 answer
charles could lowere his costs without reducing his output if he employed more instructor and few surfboards.Because the MPP of instructor is still more and will use untill it reaches to zero.
Q.4 i 4 units of ;labour and 4 units of capital
ii 4 units of labour andf 4 units of capital
iii 32 and 102 the least cost combination to produce 70 bottles.
hint profit maximisation output (TR-TC)