The Production Function Is Given by F(x) =

question 25

Multiple Choice

The production function is given by f(x) = . If the price of the commodity produced is $80 per unit and the cost of the input is $40 per unit, how much profits will the firm make if it maximizes profits?

• A) $318
• B) $1,284
• C) $640
• D) $625
• E) $323

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Definitions:

Total Manufacturing Costs

The aggregate of expenses related to producing goods, including raw materials, labor, and overhead costs.

Work in Process Inventory

Products that are in the manufacturing process but are not yet complete, considered a current asset on the balance sheet.

Gross Profit

The difference between sales revenue and the cost of goods sold, before deducting overheads, taxes, and interest payments.

Operating Expenses

Costs related to the day-to-day functions of a business outside of direct production costs, such as rent, salaries, and utilities.