You are a manager at Glass Incorporated—a mirror and window supplier. Recently, you conducted a study of the production process for your single-side encapsulated window. The results from the study are summarized in the following table and are based on the 8 units of capital currently available at your plant. Each unit of labor costs RM 60, each unit of capital is RM 20, and your encapsulated windows sell for RM 12 each.Labor LCapital KOutput QMarginal Product of Labor MPLAverage Product of Labor APLAverage Product of Capital APKValue Marginal Product of Labor VMPL 080 1810 2830 3860 4880 5890 6895 7895 8890 9880 10860 11830 Given this information, what is your optimal labor and output decision? (Notes: please apply VMPL and VMPk analysis)Given these decisions, what will be your profit?

Profit is the excess income earned by the producer which is left after paying off all the expenses…

Answered: You are a manager at Glass…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter10: Cost Functions

Section: Chapter Questions

Problem 10.9P

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You are a manager at Glass Incorporated—a mirror and window supplier. Recently, you conducted a study of the production process for your single-side encapsulated window. The results from the study are summarized in the following table and are based on the 8 units of capital currently available at your plant. Each unit of labor costs RM 60, each unit of capital is RM 20, and your encapsulated windows sell for RM 12 each.

Labor L	Capital K	Output Q	Marginal Product of Labor MP_L	Average Product of Labor AP_L	Average Product of Capital AP_K	Value Marginal Product of Labor VMP_L

0	8	0
1	8	10
2	8	30
3	8	60
4	8	80
5	8	90
6	8	95
7	8	95
8	8	90
9	8	80
10	8	60
11	8	30

Given this information, what is your optimal labor and output decision? (Notes: please apply VMP_L and VMP_k analysis)
Given these decisions, what will be your profit?

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