The following production table provides estimates of the maximum amounts of output possible with different combinations of two input factors, X and Y. (Assume that these are just illustrative points on a spectrum of continuous input combinations.)
Units of Y Used Estimated Output per Day
5 184 265 334 395 440
4 176 248 303 352 395
3 164 216 264 303 334
2 128 176 216 248 265
1 88 128 164 176 184
1 2 3 4 5
Units of X Used
A. Assuming output sells for $3 per unit, complete the following tables:
X Fixed at 4 Units
Units of Y Used Total Product of Y Marginal Product of Y Average Product of Y Marginal Revenue Product of Y
1
2
3
4
5
Fixed at 2 units
Units of X Used Total Product of X Marginal Product of X Average Product of X Marginal Revenue Product of X
1
2
3
4
5
B. Assume the quantity of X is fixed at 4 units. If the output of the production system sells for $3 and the cost of Y is $135 per day, how many units of Y will be employed?
C. Assume that the company is currently producing 248 units of output per day using 2 units of X and 4 units of Y. The daily cost per unit of X is $135 and that of Y is also $135. Would you recommend a change in the present input combination? Why or why not?