AA company is trying to decide how many machines to buy, each costing $600. The interest rate is 6% and the depreciation rate of capital is 6% per X year. Each product can be sold at $10 and the company has to pay 20% taxes on sale revenues. The yearly production of the company is given by the following numbers: Number of machines Number of products produced per year Marginal product of capital 1 100 2 150 3 180 4 194 5 204 208 How many machines will a profit maximizing firm purchase?

AA company is trying to decide how many machines to buy, each costing $600. The interest rate is 6% and the depreciation rate of capital is 6% per X year. Each product can be sold at $10 and the company has to pay 20% taxes on sale revenues. The yearly production of the company is given by the following numbers: Number of machines Number of products produced per year Marginal product of capital 1 100 2 150 3 180 4 194 5 204 208 How many machines will a profit maximizing firm purchase?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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