Suppose a firm uses a single input to produce a single output according to a production function f(x) = 10√x where x is the number of units of input. The output initially sells for £120 per unit. The input costs £20 per unit. A change in the market causes the product price to increase from £120 per unit to £200 per unit, all else equal. How does this change in product price affect the firm's profit maximizing level of profits? a. Profits increase by £16,000 Ob. Profits do not change c. Profits increase by £8,000 Od. None of the other answers is correct Profits increase by £9,000 f. Profits increase by £18,000 g. Profits increase by £50,000 h. Profits increase by £32,000 e.

Suppose a firm uses a single input to produce a single output according to a production function f(x) = 10√x where x is the number of units of input. The output initially sells for £120 per unit. The input costs £20 per unit. A change in the market causes the product price to increase from £120 per unit to £200 per unit, all else equal. How does this change in product price affect the firm's profit maximizing level of profits? a. Profits increase by £16,000 Ob. Profits do not change c. Profits increase by £8,000 Od. None of the other answers is correct Profits increase by £9,000 f. Profits increase by £18,000 g. Profits increase by £50,000 h. Profits increase by £32,000 e.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.7P

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