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a)
Marginal product of the third robot.
a)
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Explanation of Solution
Robots | Total output/product (pairs) or Total utility | Total cost | Marginal cost(TCn-1-TCn) | |
0 | 0 | 40 | ||
1 | 2 | 90 | 2 (2-0 = 2) | 50 (90-40 = 50) |
2 | 5 | 140 | 3 (5-2 = 3) | 50 |
3 | 10 | 190 | 5 | 50 |
4 | 15 | 240 | 5 | 50 |
5 | 19 | 290 | 4 | 50 |
6 | 22 | 340 | 3 | 50 |
7 | 24 | 390 | 2 | 50 |
8 | 25 | 440 | 1 | 50 |
The marginal product of the third robot is 5.
Introduction: Marginal output refers to the extra or additional output which is incurred by using one additional unit of production.
b)
Robots that are needed to acquire before the beginning of diminishing marginal utility.
b)
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Explanation of Solution
Robots | Total output/product (pairs) or Total utility | Total cost | Marginal utility or marginal product(TUn-1-TUn) | Marginal cost(TCn-1-TCn) |
0 | 0 | 40 | ||
1 | 2 | 90 | 2 (2-0 = 2) | 50 (90-40 = 50) |
2 | 5 | 140 | 3 (5-2 = 3) | 50 |
3 | 10 | 190 | 5 | 50 |
4 | 15 | 240 | 5 | 50 |
5 | 19 | 290 | 4 | 50 |
6 | 22 | 340 | 3 | 50 |
7 | 24 | 390 | 2 | 50 |
8 | 25 | 440 | 1 | 50 |
Before the beginning of diminishing marginal utility, 4 robots are needed to acquire.
Introduction: Marginal utility is the utility or satisfaction which is availed by using or consuming one additional unit.
c)
Marginal cost of the 15th pair of shoes.
c)
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Explanation of Solution
Robots | Total output/product (pairs) or Total utility | Total cost | Marginal utility or marginal product(TUn-1-TUn) | Marginal cost(TCn-1-TCn) |
0 | 0 | 40 | ||
1 | 2 | 90 | 2 (2-0 = 2) | 50 (90-40 = 50) |
2 | 5 | 140 | 3 (5-2 = 3) | 50 |
3 | 10 | 190 | 5 | 50 |
4 | 15 | 240 | 5 | 50 |
5 | 19 | 290 | 4 | 50 |
6 | 22 | 340 | 3 | 50 |
7 | 24 | 390 | 2 | 50 |
8 | 25 | 440 | 1 | 50 |
Marginal cost of the 15th pair of shoes is 50.
Introduction: Marginal cost refers to the expense or cost that is incurred by using one additional
unit of production to get maximum output.
d)
Number of robots that firm should hire to maximize profit and profit at this level of output.
d)
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Explanation of Solution
Robots | Total output/product (pairs) or Total utility | Total cost | Marginal utility or marginal product(TUn-1-TUn) | Marginal cost(TCn-1-TCn) | Price (per pair) | Total Revenue (Price × Quantity) | Profit (Total revenue − Total cost) |
0 | 0 | 40 | $30 | -40 | |||
1 | 2 | 90 | 2 (2-0 = 2) | 50 (90-40 = 50) | 30 | $60 | -30 |
2 | 5 | 140 | 3 (5-2 = 3) | 50 | 30 | 150 | 10 |
3 | 10 | 190 | 5 | 50 | 30 | 300 | 110 |
4 | 15 | 240 | 5 | 50 | 30 | 450 | 210 |
5 | 19 | 290 | 4 | 50 | 30 | 570 | 280 |
6 | 22 | 340 | 3 | 50 | 30 | 660 | 320 |
7 | 24 | 390 | 2 | 50 | 30 | 720 | 330 |
8 | 25 | 440 | 1 | 50 | 30 | 750 | 310 |
The firm should hire 7 robots to maximize profit. Here, the profit would be $330.
Introduction: Profit refers to the difference of total revenue and total cost.
Chapter 10R Solutions
Krugman's Economics For The Ap® Course
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