A Firm Uses a Single Input to Produce Its Output

question 16

Multiple Choice

A firm uses a single input to produce its output, which is sold in a competitive market. It gets quantity discounts on purchases of its input. If it buys x units of the input, the price it must pay per unit of input is + 4. If it buys no inputs, it doesn't have to pay anything. The firm's production function is f(x) = 60x - x². If the price of the firm's output is 1, the profit-maximizing amount of input to buy is

• A)56.
• B) 0.
• C) 42.
• D) 28.
• E) None of the above.

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Definitions:

Discount

A reduction from the full amount or value of an item or security, often applied to bonds sold below their face value or to promote sales of products.

Coupon Interest Rate

The percentage of a bond's value that is paid out in interest to the bondholder annually, identical to the coupon rate.

Yield To Maturity

The total return anticipated on a bond if it is held until it matures, considering all interest payments and the repayment of principal.

Par Value

The face value or nominal value of a bond, share of stock, or other financial instrument, usually representing its value upon issuance.