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Question
Table 17-7| Number of Machines | Output of Pencils (boxes per week) | Marginal Product of Capital | Product Price (dollars per box) | Total Revenue | Marginal Revenue Product of Capital | Rental Cost per Machine | Additional Profit from Renting One Additional Machine |
| L | Q | MP | P | TR | MRP | R | |
| 0 | 0 | − | $40 | − | $240 | ||
| 1 | 10 | 40 | 240 | ||||
| 2 | 18 | 40 | 240 | ||||
| 3 | 25 | 40 | 240 | ||||
| 4 | 31 | 40 | 240 | ||||
| 5 | 36 | 40 | 240 | ||||
| 6 | 40 | 40 | 240 |
Refer to Table 17-7. Dante owns a pencil factory and faces the situation shown in the table and the cost of renting a machine is $240 per week.
a. Fill in the blanks in the table and determine the profit-maximizing number of machines for Dante to rent. Explain why renting this number of machines is profit maximizing.
b. Draw Dante's demand curve for capital.
Answer
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