Suppose a company that produces woolen caps faces the situation shown in the following table and that the cost of a new sewing machine that is amortized at $100 per month.

a. Fill in the missing values in the table, and determine the profit-maximizing number of machines the company needs to buy. Briefly explain why this acquisition is a profit-maximizing one.

b. Draw the company’s demand curve for capital.

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Out- put of Woolen Marginal Number Caps Product Product Per of Price Total of Machines Month Capital Per Unit Revenue 1 300 $5 290 281 273 267 262 258 2 W|N 3 4 567 5 5 5 5 5 5 Marginal Revenue Amor- Product tization of Cost Per Additional Capital Machine Machine $300 300 300 300 Profit from Buying One 300 300 300