A Firm Uses a Single Input to Produce Its Output

question 32

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 400/x+ 4.If it buys no inputs, it doesn't have to pay anything.The firm's production function is f(x) =40x - x².If the price of the firm's output is 1, the profit-maximizing amount of input to buy is

• A)0.
• B)36.
• C)18.
• D)27.
• E)None of the above.

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Definitions:

Monopolistically Competitive

An economic model where numerous companies offer products that are alike but not exactly the same, granting them a certain level of influence over the market.

Profit-Maximizing Quantity

The level of output at which a company achieves the highest possible profit, where marginal cost equals marginal revenue.

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, allowing for significant differentiation and some degree of market power.

Total Revenue

The total amount of money received by a firm from sales of its products or services.