Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company has three machines that make widgets. The marginal cost (MC) of producing a widget on each of the three machines is constant but

A company has three machines that make widgets. The marginal cost (MC) of producing a widget on each of the three machines is constant but different across the three machines: MC1 = $2, MC2 = $5, MC3 = $15. where MC1 is the marginal cost of making a widget on machine 1, MC2 is marginal cost on machine 2, etc. Assume the company has no fixed costs. Each machine has a capacity of only 2,000 widgets.

The company sells widgets to three customers. Customer 1 has offered to pay $20 per widget for up to 2,000 widgets; customer 2 has offered to pay $15 per widget for up to 2,000 widgets; customer 3 has offered to pay $10 per widget for up to 2,000 widgets.

If the firm wants to maximize profits what is the profit?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Democracy And Public Administration

Authors: Richard C Box

1st Edition

1317473213, 9781317473213

More Books

Students also viewed these Economics questions

Question

3. Use the childs name.

Answered: 1 week ago

Question

write short notes about visual studio code

Answered: 1 week ago

Question

Solve the integral:

Answered: 1 week ago

Question

What is meant by Non-programmed decision?

Answered: 1 week ago

Question

What are the different techniques used in decision making?

Answered: 1 week ago