The Missing Link Chain-Link Fence Company is trying to determine how many chain-link fabricating machines to buy for its factory. If we define a chainlink fence of some specified length to be equal to one unit of output, the price of a new fabricating machine is 60 units of output, and the price of a one-year-old machine is 51 units of output. These relative prices are expected to be the same in the future. The expected future marginal product of fabricating machines, measured in units of output, is 165-2K, where K is the number of machines in use. There are no taxed of any sort. The real interest rate is 10% per year.
(a) What is the user cost of capital? Specify the units in which your answer is measured.
(b) Determine the number of machines that will allow Missing Link to maximize its profit.
(c) Suppose that Missing Link must pay a tax equal to 40% of its gross revenue. What is the optimal number of machines for the company?
Answers (1)
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “The Missing Link Chain-Link Fence Company is trying to determine how many chain-link fabricating machines to buy for its factory. If we ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Which of the following utilities is not directly related to marketing
Answers (1)
What prevents farquars in no witchcraft for sale from seeing gideon as an intelligent and capable adult?
Answers (1)
How can business taxes positively affect an economy? A If taxes are low, more businesses can be created. B If taxes are low, then businesses will give more of their earnings away.
Answers (1)
John, a line supervisor, has decided to increase Kerry's responsibilities by delegating more work to her station.
Answers (1)
Marian Company reported the following items for the month of July: Sales revenue $ 473 comma 300 Cost of goods sold $ 300 comma 000 Beginning inventory $ 64 comma 400 Ending inventory $ 74 comma 200 Inventory turnover is: (Round your final answer to
Answers (1)
New Questions in Business
Beswick company your team is allocated a project involving a major client, the beswick company. although the organization has many clients, this client, and project, is the largest source of revenue and affects the work of several other teams in the
Answers (1)
What is mean't by a focus group
Answers (2)
Manufacturers follow four steps to implement a manufacturing overhead allocation system. what is the first step?
Answers (1)
The budgeted production of Capricorn, Inc. is 13 comma 000 units per month. Each unit requires 40 minutes of direct labor to complete. The direct labor rate is $ 100.00 per hour. Calculate the budgeted cost of direct labor for the month.
Answers (1)
If the price level doubled in a 23-year period, we can conclude that the average annual rate of inflation over that period was about 3 percent. a) true b) false
Answers (1)