Question

In: Economics

A company producing plastic cell-phone cases uses a $5,000 blower, a $2,000 processor, and $4,200 worth...

A company producing plastic cell-phone cases uses a $5,000 blower, a $2,000 processor, and $4,200 worth of molds. The rent paid for their space in an industrial park is $5,000 per production period. The cost of materials (resins and compounds) is $10 per unit. The cell phone case market is competitive, with a market price of $25. Each unit of labor is paid $5,000 per production period. The production technology is described by Table 2.

Table 2: The Total Product Schedule for a Cell-Phone Case Company

Labor (L) Output (Q)

0 0

1 374

2 1000.80

3 1761.8

4 2589.08

5 3427.1

6 4226.66

7 4941.62

8 5528.13

9 5943.72

10 6147.00

1(a).How many cell-phone cases will the company produce to maximize profit? What is the maximum amount of profit?

1(b). Using the company's short-run cost curves (ATC, AVC, and MC) and the MR curve, demonstrate how you found your answer to Question 1(a).

1(c). What is the company's break-even price?

THIS IS ALL THE INFO GIVEN.

Expert Solution

a) Calculations:

Result:

b) Calculations:

Result:

c) Calculations:

Result:

Rahul Sunny answered 2 years ago

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