Question: Adam operates a pin factory. Suppose Adam faces the situation shown in the following table and the cost of renting a machine is $550 per

Adam operates a pin factory. Suppose Adam faces the situation shown in the following table and the cost of renting a machine is $550 per week.

a. Fill in the blank cells in the table and determine the profit-maximizing number of machines for Adam to rent. Briefly explain why renting this number of machines is profit maximizing.

b. Draw Adam's demand curve for capital.

Additional Profit from Output of Pins Marginal Price Number (boxes Product (dollars Product Marginal Revenue Product Rental of Renting One Cost per Additional Machine Machine of of Total per Machines week) Capital per box) Revenue Capital $100 $550 1 12 100 550 100 21 550 3 28 100 550 4 34 100 550 5 39 100 550 43 100 550 888888

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