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Q1. You have been hired as an economic consultant by a price-taking...

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Q1. You have been hired as an economic consultant by a price-taking...

Q1. You have been hired as an economic consultant by a price-taking (a perfectly competitive) firm that produces T-shirts. The firm already has a factory, so it is operating in the short-run. The price of T-shirt is $9, the hourly wage is $24, and each T-shirt requires $1 worth of material. The following table shows the relationship between the number of workers and output of T-shirts.

Workers101112131415
Output52941475052
Labor cost      
Material cost      
Fixed cost$2$2$2$2$2$2
Total cost      
Marginal cost      

 

  1. Fill in the blanks in the table. (3 points)
  2. What is the profit maximizing output? [ students may use marginal approach] (1 points)

Note: For answering question-1 (a) and (b) students are required to show all possible calculations.

Answer & Explanation

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Answered by BarristerCloverGoldfinch21 on coursehero.com
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