We R' Write has collected some cost information for you regarding the production of pens. In the table below, you are provided with the total output of pens per day corresponding to different levels of labor. You are also provided with the price of labor per day, the total fixed costs per day, and the price per pen. Currently, We R' Write is using 75 employees on the production line. Is this level producing maximum profits? How did you determine this answer? What is the level of profit made when 90 workers are used per day to produce pens? How did you determine this? Should We R' Write continue to produce or temporarily shut down in the short run, if 12,000 pens are produced per day? Why, or why not? At what level of output and workers used are profits maximized? Identify two ways you can find this maximum profit using the information in the table below.
We R' Write has collected some cost information for you regarding the production of pens. In the table below, you are provided with the total output of pens per day corresponding to different levels of labor. You are also provided with the price of labor per day, the total fixed costs per day, and the price per pen.
- Currently, We R' Write is using 75 employees on the production line. Is this level producing maximum profits? How did you determine this answer?
- What is the level of profit made when 90 workers are used per day to produce pens? How did you determine this?
- Should We R' Write continue to produce or temporarily shut down in the short run, if 12,000 pens are produced per day? Why, or why not?
- At what level of output and workers used are profits maximized? Identify two ways you can find this maximum profit using the information in the table below.
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Round these answers to the nearest whole number |
Round these answers to the nearest penny |
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Output (Pens Produced) |
Number of Workers Employed per Day |
Price of Labor per Worker per Day |
Total Variable Cost of Labor |
Total Fixed Costs per Day |
Total Cost per Day |
Price per Pen |
Total Revenue |
Profit |
Variable Cost |
Average Fixed Cost |
Total Cost |
Marginal Cost |
Marginal Revenue |
|
0 |
0 |
$560 |
$0.00 |
$500 |
$500 |
$3.50 |
$0.00 |
-$500 |
--- |
--- |
--- |
--- |
--- |
|
1,000 |
15 |
$560 |
$8,400 |
$500 |
$8,900 |
$3.50 |
$3,500 |
-$5,400 |
$8.40 |
$0.50 |
$8.90 |
$8.40 |
$3.50 |
|
2,700 |
30 |
$560 |
$16,800 |
$500 |
$17,300 |
$3.50 |
$9,450 |
-$7,850 |
$6.22 |
$0.19 |
$6.41 |
$4.94 |
$3.50 |
|
5,100 |
45 |
$560 |
$25,200 |
$500 |
$25,700 |
$3.50 |
$17,850 |
-$7,850 |
$4.94 |
$0.10 |
$5.04 |
$3.50 |
$3.50 |
|
7,900 |
60 |
$560 |
$33,600 |
$500 |
$34,100 |
$3.50 |
$27,650 |
-$6,450 |
$4.25 |
$0.06 |
$4.32 |
$3.00 |
$3.50 |
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12,000 |
75 |
$560 |
$42,000 |
$500 |
$42,500 |
$3.50 |
$42,000 |
-$500 |
$3.50 |
$0.04 |
$3.54 |
$2.05 |
$3.50 |
|
15,700 |
90 |
$560 |
$50,400 |
$500 |
$50,900 |
$3.50 |
$54,950 |
$4,050 |
$3.21 |
$0.03 |
$3.24 |
$2.27 |
$3.50 |
|
18,100 |
105 |
$560 |
$58,800 |
$500 |
$59,300 |
$3.50 |
$63,350 |
$4,050 |
$3.25 |
$0.02 |
$3.28 |
$3.50 |
$3.50 |
|
20,300 |
120 |
$560 |
$67,200 |
$500 |
$67,700 |
$3.50 |
$71,050 |
$3,350 |
$3.31 |
$0.02 |
$3.33 |
$3.82 |
$3.50 |
|
21,900 |
135 |
$560 |
$75,600 |
$500 |
$76,100 |
$3.50 |
$76,650 |
$550 |
$3.45 |
$0.02 |
$3.47 |
$5.25 |
$3.50 |
|
22,300 |
150 |
$560 |
$84,000 |
$500 |
$84,500 |
$3.50 |
$78,050 |
-$6,450 |
$3.77 |
$0.02 |
$3.79 |
$21.00 |
$3.50 |
|
22,300 |
165 |
$560 |
$92,400 |
$500 |
$92,900 |
$3.50 |
$78,050 |
-$14,850 |
$4.14 |
$0.02 |
$4.17 |
$0.00 |
$3.50 |
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21,500 |
180 |
$560 |
$100,800 |
$500 |
$101,300 |
$3.50 |
$75,250 |
-$26,050 |
$4.69 |
$0.02 |
$4.71 |
$-10.50 |
$3.50
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