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Smiling Cow Dairy can sell all the milk it wants for $4 a gallon, and it can rent all the robots it wants to milk the cows at a capital rental price of $100 a day. If faces the folling productions schedule:
Number of robots and Total products0 robots 0 gallons1 robot 50 gallons2 robots 85 gallons3 robots 115 gallons4 robots 140 gallons5 robots 150 gallons6 robots 155 gallons
a. In what kind of market structure does the firm sell its output? how can you tell?
b. In what kind of market structure does the firm rent robots? how can you tell?
c. Calculate the marginal product and the value if the marginal product for each additional robot.
d. How many robots should the firm rent? Explain
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