Question
Marlon produces marbles using one input, glass with a production function y = 4G 0.5 . Glass costs $50 per pound, and marbles sell for
Marlon produces marbles using one input, glass with a production function y = 4G0.5. Glass costs $50 per pound, and marbles sell for $100 each.
a) What's his profit maximizing production plan? What is his profit?
b) Suppose the city decides to tax his marbles at $20 per marble, but there is now a subsidy on glass at $10 per pound. What's his new profit maximizing production plan?
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Management and Cost Accounting
Authors: Colin Drury
8th edition
978-1408041802, 1408041804, 978-1408048566, 1408048566, 978-1408093887
