Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Paducah Slugger Company makes baseball bats out of lumber supplied to it by Acme Sporting Goods, which pays Paducah $10 for each finished bat. Paducah's

image text in transcribed
Paducah Slugger Company makes baseball bats out of lumber supplied to it by Acme Sporting Goods, which pays Paducah $10 for each finished bat. Paducah's only factors of production are lathe operators and a small building with a lathe. The number of bats per day it produces depends on the number of employee-hours per day, as shown in the table below. a. The wage is $15 per hour and Paducah's daily fixed cost for the lathe and building is $60. Instructions: Complete the table below. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Express marginal cost values rounded to the nearest penny (two decimal places). Number of Total Total labor Marginal 2 (bats per employee-hours revenue cost Total cost Profit cost OK day) per day ($ per day) ($ per day) ($ per day) ($ per day) per bat 0 0 5 1 nces 10 2 15 4 20 7 25 11 30 16 35 22 What is the profit-maximizing quantity of bats (note the values for MR and MC)? [bats. b. What would Paducah's profit-maximizing level of output be if the government imposed a tax of $10 per day on the company? (Hint. Think of this tax as equivalent to a $10 increase in fixed cost.) bats c. What would Paducah's profit-maximizing level of output be if the government imposed a tax of $2 per bat instead of the $10 tax of part b? (Hint. Think of this tax as a $2 per bat increase in the firm's marginal cost.) bats d. Why do the taxes in parts b and c have such different effects

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

Green Jobs For Sustainable Development

Authors: Ana Maria Boromisa, Sanja Tišma

1st Edition

131775185X, 9781317751854

More Books

Students also viewed these Economics questions

Question

What is a multivariate data set?

Answered: 1 week ago