A competitive firm produces output using three fixed factors and one variable factor. The firm's short run production function i

Question

3 years ago

12

A competitive firm produces output using three fixed factors and one variable factor. The firm's short run production function i

s q = 305x - 2x2; where x is the amount of variable factor used. The price of output is $2 per unit and the price of the variable factor is $10 per unit. In the short run, how many units of x should the firm use?(a) 37(b) 150(c) 21(d) 75(e) None of the above.

Business

1 answer:

Nesterboy [21] · Answer 1 · 2022-08-21T16:59:40+03:00

Nesterboy [21]3 years ago

6 0

Answer:

D) 75

Explanation:

Our initial production function is:

q = 305X - 2X²

we calculate the derivative of q:

(q') = 305 - 4X

MP = 305 - 4X

$10 / $2 = 305 - 4X

5 = 305 - 4X

4X = 305 - 5 = 300

x = 300 / 4

x = 75