A Firm Uses a Single Input to Produce Its Output

question 20

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 289/x + 3.If it buys no inputs, it doesn't have to pay anything.The firm's production function is f(x) = 45x - x².If the price of the firm's output is 1, the profit-maximizing amount of input to buy is

• A)21.
• B)0.
• C)42.
• D)31.50.
• E)None of the above.

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Definitions:

Variable Input

Any resource used in production whose quantity can be changed in the short term to increase or decrease output, such as labor or raw materials.

Marginal Cost

The expenditure incurred from creating one more unit of a product or service.

Total Variable Cost

The total of expenses that vary directly with the level of production or output.

Marginal Cost

The increment in expense for generating an additional unit of a product or service.