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:

Fixed Manufacturing Cost

Costs that remain constant regardless of the level of production, such as salaries of permanent employees and depreciation of factory equipment.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, such as utilities, depreciation, and maintenance of equipment.

Direct Manufacturing Cost

Expenses directly associated with the production of goods, including labor and materials costs.

Indirect Manufacturing Cost

Costs related to the production process that are not directly traceable to specific products, such as maintenance, supervision, and utility expenses.