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OlKu OlKu
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A year ago
The firm in the table below produces denim jeans and each unit of capital represents one sewing machine. The MRP for each of machines 10 through 14 is provided. Each sewing machine delivers a stream of MRPs beginning one year from now, for a total of 2 years. Assume that after 2 years each sewing machine is worth nothing.

Number of
Sewing Machines		Annual MRP
10$2000
11$1800
12$1600
13$1400
14$1200

TABLE 15-2

Refer to Table 15-2. What principle will this firm follow to determine the optimal number of sewing machines to own and operate?

▸ The annual MRP on the last unit of capital should be equal to (or greater than) its purchase price.

▸ The marginal products of each machine should be equal.

▸ The present value of the future MRPs on the last unit of capital is equal to (or greater than) its purchase price.

▸ The present value of the future MRPs should be increasing over time.

▸ The marginal revenue products of all the machines should be equal.
Textbook 
Microeconomics

Microeconomics


Edition: 17th
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enzeeenzee
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A year ago
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OlKu Author
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A year ago
Good timing, thanks!
hmonier
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Yesterday
Correct Slight Smile TY
Goku935
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2 hours ago
Smart ... Thanks!
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