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Economics assignment - due Sunday 30th @ 4 PM CST

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The homework covers Ch 11~13. It has to be your individual work. For each question, please show the;necessary derivation (if applicable) and highlight theanswer.Limityouranswerswithin5pages.Nocover;sheetisrequired.;Q1: CH 11;(30%);Consider a pricetaking firm that has total fixed cost of $50 and faces a market determined price of $2 per;unitfor;its output. The wage rate is $10 per unit of labor, the only variable input. Using the following table;answer the;questions;below.;(1)Unitsof;Labor;1;2;3;4;5;6;7;8;9;10;(2);Output;5;15;30;50;65;77;86;94;98;96;(3);Marginal;Product;(4);Marginal;RevenueProduct;(5);MarginalCost;(6);Profit;a.Fillintheblanksincolumn 3ofthetablebycomputingthemarginalproductoflaborforeach levelof;laborusage.;b.Fillintheblanksincolumn 4ofthetablebycomputingthemarginalrevenueproductforeach levelof;laborusage.;c. Fillintheblanksincolumn5ofthetablebycomputingmarginalcost.;d. Howmuchlaborshouldthemanagerhireinordertomaximizeprofit?Why?;e. Howmanyunitsofoutputshouldthemangerproduceinordertomaximizeprofit?Why?;f.Fillintheblanksincolumn6withtheprofitearnedateachleveloflaborusage.;g. Doyouranswerstopartscandemaximizeprofit?Doesitmatterwhetherthemanagerchooseslabor;usageorchoosesoutputinordertomaximizeprofit?Why?;h. Howmuchlaborshouldthemanagerhirewhenthewagerateis$20?Howmuchprofitisearned?Is;marginalproductgreaterorlessthanaverageproductatthisleveloflaborusage?Whydoesitmatter?;Q2:CH11(15%);Supposeyouwonahoeremodelingcompany.Youarecurrentlyearningshortrunprofits.Thehome;remodeling;industryisanincreasingcostindustry.Inthelongrun,whatdoyouexpectwillhappento;a.Yourfirmscostsofproduction? Explain.;b.Thepriceyoucanchargeforyourremodelingservices?Why?;c.Profitsinhomeremodeling?Why?;Q3: CH 12;(15%);Higher unemployment caused by the recession and higher gasoline prices have contributed to a;substantialreduction during2008 in thenumber of vehicleson roads, bridges,and in tunnels. Accordingto;TheWallStreetJournal(April28,2009),thereductionindemandfortollbridgeandtunnelcrossingcreateda;serious revenueproblem formany cities. InNewYork,thenumber ofvehiclestravelingacrossbridges and;throughtunnelsfellfrom23.6millioninJanuary2008to21.9millioninJanuary2009. Thatdroppresentsa;challenge,becauseroadtollssubsidize MTAsubways,which aremorelikelytobeusedaspeoplegetoutof;their cars. In an apparent attempt to rise toll revenue, the MTA increased tolls by 10 percent on the nine;crossingsitcontrols.;a. IsMTAamonopolist inNew YorkCity? Do youthinkMTApossessesahigh degreeofmarketpower?;Whyorwhynot?;b. Ifthemarginalcostoflettinganothervehiclecrossabridgeortravelthroughatunnelisnearlyzero,how;shouldtheMTAsettollsordertomaximizeprofit?Inordertomaximizetollrevenue?Howarethesetwo;c. objectivesrelated?;Withthedecreaseindemandforbridgeandtunnelcrossings,whatistheoptimalwaytoadjusttolls:raise;tolls;lowertolls,orleavetollsunchanged?Explaincarefully?;Q4: CH 12;(20%);The Ali Baba Co. is theonly supplier of a particular type of Orientalcarpet. The estimated demant for its;carpetsis;Q=112,000500P+5M;WhereQ=numberofcarpets,P=priceofcarpets(dollarsperunit),andM=consumersincomepercapita.;TheestimatedaveragevariablecostfunctionforAliBabascarpetsis;AVC=2000.012Q+0.000002Q2;Consumersincomepercapitaisexpectedtobe$20,000andtotalfixedcostis;$100,0000.a. Howmanycarpetsshouldthefirmproduceinordertomaximize;profit?;b. What is the profit maximizing price of;carpets?;c. What is the maximum amount of profit that the firmcan earn selling;carpets?;d. Answer parts a throughc if consumersincome per capita is expected to be $30,000;instead.;Q5: CH 12;(20%);Afirmwithtwofactories,oneinMichiganandoneinTexas,hasdecidedthatit shouldproducetotalof500;units;to maximize profit. The firm is currently producing 200units in the Michigan factory and 300 units in the;Texas;factory.Atthisallocationbetweenplants,thelastunitofoutputproducedinMichiganadded$5tototalcost;whilethelastunitofoutputproducedinTexasadded$3tototalcost.;a. Isthefirmmaximizingprofit? Ifso,why?Ifnot,whatshouldit;do?;b.If the firmproduces201unitsin Michigan and299 in Texas, what willbethe increase(decrease) inthe;firms;totalcost;View Full Attachment;Additional Requirements;Min Pages: 3;Level of Detail: Show all work;Other Requirements: Use Excel

 

Paper#15210 | Written in 18-Jul-2015

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