Digita Ltd. produces digital watches on a single production line serviced on one daily shift. Maximum capicity- 120,000; hours of labour per month- 60,000; totalfixed cost- $600,000; labour rate per hour- $8; variable cost per watch- $6.Demand equation- Q = 560,000 – 20,000P.
1. How many additional watches can be produced an extra hour of labour;
2. What is the marginal cost of an additional watch;
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3. What price should the firm set to maximise profit;
4. Labour rate at night per hour $12, what is the marginal cost of additional watch on the night shift?