A competitive firm produces output using three fixed factors and one variable factor.The firm's short-run production function is q = 154x - 5x², where x is the amount of variable factor used.The price of the output is $2 per unit and the price of the variable factor is $8 per unit.In the short run, how many units of x should the firm use? A)15 B)30 C)17 D)7 E)None of the above.

Question

Quizplus · Accepted Answer

The firm should use 15 units of x in the short run. This is because the marginal product of x is equal to the price of x at this level of output.

A Competitive Firm Produces Output Using Three Fixed Factors and One