You are the manager at Glass Inc. which is a mirror and window supplier. Recentl

Question

You are the manager at Glass Inc. which is a mirror and window supplier. Recently, you conducted a study of the production process for your single-side encapsulated window. The results from the study are summarized in the attached table and are based on the 5 units of capital currently available at your plant. Workers are paid $50 per unit, per unit capital cost are $10, and your window sells for $5 each. Please optimize the human resource and production decisions. Do anticipate earning a profit or loss? Explain carefully.

Labor Output
0 0
1 10
2 30
3 60
4 80
5 90
6 95
7 95
8 90
9 80
10 60
11 30

Explanation / Answer

In this case, our TC-FC+VC TC=0+10x MC= derivative of FC MC=10 In this case, we can tell that for all levels of production, costs will be greater than profit due to high labor costs. For each unit, costs are 50+10=60 while benefits are 5 each for a loss of 55 per unit produced Hope this helps

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