Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince

Exercise 9

You are a manager at Glass Inc.-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 below, and are based on the eight units of capital currently available at your plant. Workers are paid $60 per unit, per unit capital costs are $20, and your encapsulated windows sell for $12 each. Given this information, optimize your human resource and production decisions. Do you anticipate earning a profit or a loss? Explain carefully.