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Homework answers / question archive / Optimal choice of capital Cho makes sweaters in her home
Optimal choice of capital Cho makes sweaters in her home. She started with just some knitting needles and yarn and was able to knit 70 sweaters per year. Now some local Is stores have expressed interest in her designs and have offered to buy her sweaters for $10 each. This makes it worthwhile for her to invest in some capital; in particular, she could produce many more sweaters if she invested in one or more looms, as shown in the following table. A- O Complete the following table by calculating the marginal product (MP) of each loom and the marginal revenue product (MRP) of each loom. Quantity of Input Output MP of Each Loom MRP of Each Loom (Looms) (Sweaters per year) (Sweaters) (Dollars) 0 70 130 N 181 W 226 bongo A 265 5 301 If the rental price of a loom is $375 per year, Cho should use V 4
