Micro Economics

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In YEAR 1, the price of gadgets is $2, while the price of the single variable input used is $28.
A profit-maximizing gadget producer uses 9 units of input to produce and sell 252 units of gadgets, earning profit of $2*252 - $28*9 = $252


In YEAR 2, the price of gadgets is $3, while the price of the single variable input used is $18.
A profit-maximizing gadget producer uses 49 units of input to produce and sell 588 units of gadgets, earning profit of $3*588 - $18*49 = $882


A production plan is feasible if it lies BELOW a firm's iso-profit lines.

Which of the following production plans (input-output combinations) are feasible for (within the technology set of) a profit-maximizing gadget producer?

(a) use 15 units of input to produce 330 units of gadgets
(b) use 20 units of input to produce 400 units of gadgets
(c) use 25 units of input to produce 450 units of gadgets
(d) use 30 units of input to produce 470 units of gadgets


Question 11 options:

1) all of the production plans are feasible

2) plans (a), (b) and (c) are feasible, plan (d) is NOT feasible

3) plans (a), (b) and (d) are feasible, plan (c) is NOT feasible

4) plans (a), (c) and (d) are feasible, plan (b) is NOT feasible

5) plans (b), (c) and (d) are feasible, plan (a) is NOT feasible

6) two of the plans are feasible, two are NOT feasible

7) only plan (a) is feasible, plans (b) , (c) and (d) are NOT feasible

8) only plan (b) is feasible, plans (a) , (c) and (d) are NOT feasible

9) only plan (c) is feasible, plans (a) , (b) and (d) are NOT feasible

10) only plan (d) is feasible, plans (a) , (b) and (c) are NOT feasible

11) NONE of the production plans are feasible

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