Question

2. Problems and Applications Q4 Smiling Cow Dairy can sell all the milk it wants for $5 a gallon, and it can rent all the robots it wants to milk the cows at a capital rental price of $200 a day. It faces the following production schedule: Total Product (Gallons) Number of Robots 55 100 140 165 180 190 In what kind of market structure does the firm sell its output? O Monopolistically competitive O Monopolistic O Perfectly competitive O Oligopolistic

Answer 1

The firm sell its output in - Perfectly competitive market

The firm rent robots in - Perfectly competitive market

Robots	TP	MP	VMPL
0	0
1	55	55	275
2	100	45	225
3	140	40	200
4	165	25	125
5	180	15	75
6	190	10	50

The firm should rent 3 robots