Question #6663

A competitive firm produces output using three fixed factors and one variable factor. The firm’s short-run production function is q = 154x – 5x2, where x is the amount of variable factor used. The price of the output is $2 per unit and the price of the variable factor is $8 per unit. In the short run, how many units of x should the firm use?

Expert's answer

Q is max when q'=0, q' = 154 - 10x = 0, x = 15.4, so in the short run the firm

should use 16 units of x.

should use 16 units of x.

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