Suppose a profit-maximizing firm can produce 70 units
Suppose a profit-maximizing firm can produce 70 units of a hypothetical product, wendals, by combining labor, land, capital, and entrepreneurial ability in each of the four ways shown in the table below. Assume further that the firm can hire land at $3 per unit, capital at $6 per unit, and entrepreneurship at $9 per unit.
TECHNIQUES
A | B | C | D | |
LABOR | 4 | 10 | 8 | 5 |
LAND | 5 | 3 | 3 | |
CAPITAL | 5 | 2 | 4 | |
ENTREPRENEURSHIP | 1 | 1 | 1 | 1 |
TECHNIQUE COST | $66 | $60 | ||
REVENUE | ||||
PROFIT | $45 | $48 |
15. The price of a unit of wendals is ________.
16. The total revenue for this firm is________.
17. The price of labor is _________.
18. The cost of technique B is _______.
19. The cost of technique D is ________.
20. The amount of land embedded in technique B is _________.
21. The amount of capital embedded in technique C is _________.
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Solution: Suppose a profit-maximizing firm can produce 70 units