You are a manager at Glass Incorporated—a mirror and window supplier. Recently, you conducted a study of the production process for your single-side encapsulated window. The results from the study are summarized in the following table and are based on the 8 units of capital currently available at your plant. Each unit of labor costs RM 60, each unit of capital is RM 20, and your encapsulated windows sell for RM 12 each. Labor L Capital K Output Q Marginal Product of Labor MPL Average Product of Labor APL Average Product of Capital APK

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter10: Cost Functions
Section: Chapter Questions
Problem 10.9P
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You are a manager at Glass Incorporated—a mirror and window supplier. Recently, you conducted a study of the production process for your single-side encapsulated window. The results from the study are summarized in the following table and are based on the 8 units of capital currently available at your plant. Each unit of labor costs RM 60, each unit of capital is RM 20, and your encapsulated windows sell for RM 12 each.

Labor L

Capital K

Output Q

Marginal Product of Labor MPL

Average Product of Labor APL

Average Product of Capital APK

Value Marginal Product of Labor VMPL

 
 

0

8

0

 

 

 

 

 

1

8

10

 

 

 

 

 

2

8

30

 

 

 

 

 

3

8

60

 

 

 

 

 

4

8

80

 

 

 

 

 

5

8

90

 

 

 

 

 

6

8

95

 

 

 

 

 

7

8

95

 

 

 

 

 

8

8

90

 

 

 

 

 

9

8

80

 

 

 

 

 

10

8

60

 

 

 

 

 

11

8

30

 

 

 

 

 
  1. Given this information, what is your optimal labor and output decision? (Notes: please apply VMPL and VMPk analysis)
  2. Given these decisions, what will be your profit?
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