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28 Sep 2019
Assume that a perfectly competitive firm produces widgets and can produce them using any of three processes. The following table indicates the amounts of labor and capital required by each process to produce one widget.
Process A: Units of labor- 4 Units of capital- 1
Process B: Units of labor- 2 Units of capital- 2
Process C: Units of labor- 1 Units of capital- 1
a.) Assuming that capital costs $3 per unit and that labor cost $1 per unit, which of the three processes will the perfect competitor employ and why?
b.) Plot the three Total Variable Cost for the selected production processes for Q= 10, Q= 30 and Q= 50.
Assume that a perfectly competitive firm produces widgets and can produce them using any of three processes. The following table indicates the amounts of labor and capital required by each process to produce one widget.
Process A: Units of labor- 4 Units of capital- 1
Process B: Units of labor- 2 Units of capital- 2
Process C: Units of labor- 1 Units of capital- 1
a.) Assuming that capital costs $3 per unit and that labor cost $1 per unit, which of the three processes will the perfect competitor employ and why?
b.) Plot the three Total Variable Cost for the selected production processes for Q= 10, Q= 30 and Q= 50.
Kritika KrishnakumarLv10
28 Sep 2019
