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# QUESTION 1Use for questions 1 -2: Selecting the appropriate level of aircraft skin forming machines: The A-1 Corporation supplies airplane manufactures with preformed aircraftskin panels that are used on the exterior of aircraft. Aircraft skin forming machines required to manufacture these panels can be leased on an as needed basis for \$12,500each. Given the complexity of working with exotic metals used in the manufacturing process, workers areprice for one of A-1's panels is \$70. Based on the production data in the following table, how many aircraft skin forming machines should A-1 lease to maximize profits?highly skilled and must be retained at all times. The marketAircraftNumber ofValue ofskinMarginal Price of IncremenformingmachinesPanelsAverageMarginalProductProductInput tal ProfitWorkersProducedProductPriceProduct060650261100361400155041680661720AFTER filing in the table, which of the following decision criteria should you use to determine the number of inputs (in this case the number of Aircraft skin-forming machines) that youshould lease?a. Greatest value of marginal productb.Highest Incremental ProfitC.Expansion of output as long as the value of marginal product is greater than the input pricedHighest number of panels produced

Question
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Step 1

With the following information the table can be completed:

Average Product= Number of Panels Produced/ Aircraft skin forming machines (As workers are constant)

Marginal Product = (Number of Panels Produced) n – (Number of Panels Produced) n-1

Product Price (given) = \$70

Value of Marginal Product= Marginal Product * Product Price

Price of input (given) = \$12500 (for each unit)

Incremental Profit = Value of Marginal Product - Price of input

Step 2

The criteria that determines the number of inputs (i.e. Aircraft skin forming machines) that should be leased is (c) Expansion of output as long as the Value of Marginal Product is greater than the Price of Input. The reason be...

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### Economics

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