Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A perfectly competitive firm produces digital devices using capital and labour. The wage rate is $16, the rental cost of capital is $16, and the

A perfectly competitive firm produces digital devices using capital and labour. The wage rate is $16, the rental cost of capital is $16, and the price of a digital device is $20. Suppose that the cost-minimising way to produce 10 digital devices is to use 2 units of labour and 2 units of capital, and the cost-minimising way to produce 11 digital devices is to use 2.2 units of labour and 2.2 units of capital. The marginal revenue (MR) of producing the 11th digital device is:

$7.5

$13

$20

$16

Which one is it, and why?

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

Principles Of Economics

Authors: Robert H. Frank, Ben Bernanke Professor, Kate Antonovics, Ori Heffetz

6th Edition

0078021855, 9780078021855

More Books

Students also viewed these Economics questions

Question

2. Ask questions, listen rather than attempt to persuade.

Answered: 1 week ago