Answered: RS Inc. sell a product for P2 per unit…

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter22: Price Takers And The Competitive Process

Section: Chapter Questions

Problem 6CQ: Suppose that the development of a new drought-resistant hybrid seed corn leads to a 50 percent...

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RS Inc. sell a product for P2 per unit in a highly competitive market. The firm produces output using capital (which it rents at P75 per hour) and labor (which is paid a wage of P15 per hour under a contract for 20 hours of labor services). Complete the following table and use that information to answer the questions that follow.

K	L	Q	MP_K	AP_K	AP_L
0	30	0
1	30	50
2	30	150
3	30	300
4	30	400
5	30	450
6	30	450
7	30	400

Identify the fixed and variable inputs.
What are the firm’s fixed costs?
What is the variable cost of producing 475 units of output?

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