Homework SourseQ110 The Wage is 30 The land costs 100 The wheat sells for
Q1-10
The Wage is $ 30 The land costs $ 100 The wheat sells for $ 10 per unit
#Employee Marginal product
1--------------------70
2--------------------100
3--------------------80
4--------------------50
5--------------------3
6--------------------2
7--------------------1
1) With 5 employee, the total product is equal to?
2) With 3 employee, the total product is equal to?
3) With 6 employee, total cost equal to ?
4) With 2 employee, total revenue equal to ?
5) With 5 employee, total revenue is equal to ?
6) If all these employee have the same skill level, why does employee 2 have a larger MPL than employee 1 ?
7) How many employees should this firm hire to maximize its profits ?
8) If this firm does hire the number of employees you answered for question (7), they will have TOTAL PROFITS equal to?
9) If all these employees have the same level of skill, why does employee 6 have a smaller marginal product than employee 5?
10) What is the amount of TOTAL FIXED costs for this firm and for all firms in the SHORT run.?
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True or False: (11-16)
11) A production function shows the quantity of output that can be produced with different quantities of inputs.
12) In the short run the firm has at least one fixed input.
13) The firm can maximize profits by only hiring workers who bring in added revenue equal to or larger than the marginal cost of hiring them.
14) The total product is the sum of the marginal products of all the workers.
15) In the short run, the firm%u2019s supply curve is its Average Cost curve.
16) In the short run, average fixed cost keeps rising as the firm increases its quantity of output.
Use the following: Q17 to 25
17) What is the maximum technical efficiency output level for this firm ?
18) On the diagram above, AVERAGE VARIABLE COST is the HIGHEST at .what Quantity ?
19) On the diagram above, AVERAGE FIXED is the LOWEST at. what Quantity ?
20) If the market Price =$80, what is the profit maximizing output level for this firm ?
21) At the output level you answered for question (20), what will be the TOTAL PROFITS for this firm?
22) In the long run, this firm will make profits equal to what ?
23) This firm would have positive profits so long as the market price was ABOVE what ?(how many dollars?)
24) This firm would make zero profits if the market price was equal to what ?(how many dollars ?)
25)This firm would make negative profits (lose money), if the market price was below what? (how many dollars ?)
Solution
1. 303 UNITS
2. 250
3. 100 ONLY
4. 20
5. 50
6. IT IS BECAUSE OF THE OPTIMUM COMBINATION OF FACTORS THAT IS REQUIRED FOR ANY GIVEN TECHNOLOGY.
7 TO MAXIMISE THE PROFITS THE FIRM SHOULD HIRE 7 EMPLOYEES BECAUSE UP TO 7TH EMPLOYEE MARGINAL PRODUCT IS POSITIVE
11 TRUE.
12. TRUE
13. TRUE
14 TRUE
15. FALSE
16 FALSE
17 . 300
18. AVERAGE VARIABLE COST IS NOT DRAWN IN THE GIVEN DIAGRAM.
19 AVERAGE FIXED COST OS NOT DRAWN IN THIS DIAGRAM
20. 300 UNITS,
21. 300*(80-40)=1200
22 IN THE LONG RUN FIRM WILL MAKE NORMAL PROFITS ONLY. NORMAL PROFITS ARE WHERE MC= MR =PRICE=AC.
23. 20
24. AT PRESENT IT IMAKING NORMAL PROFITS IF THE PRICE IS 20. IF THE MARKET PRICE IS BELOW 20 IT WILL BE MAKING ZERO PROFITS.
25.BELOW 20
