Asked by
Ladechaz Hernandez
on Dec 01, 2024
Verified
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.
Price Discounts
Reductions from the regular selling price of goods or services, often used as a strategy to increase demand or reward customers.
Competitive Market
A market structure characterized by a large number of buyers and sellers, free entry and exit, and a homogenous product, leading to price determination through supply and demand forces.
Production Function
A mathematical model in economics that describes the relationship between input resources and the output of goods or services a firm can produce.
- Understand the concept of profit maximization and its application in different market structures.
- Apply mathematical models to determine the optimal level of production and pricing strategies for firms under various circumstances.
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Learning Objectives
- Understand the concept of profit maximization and its application in different market structures.
- Apply mathematical models to determine the optimal level of production and pricing strategies for firms under various circumstances.