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The only variable input a janitorial firm




1. The only variable input a janitorial firm uses to clean offices is workers who are paid a wage, w, of $8 an hour. Each worker can clean four offices an hour. Determine the variable cost, the average variable cost, and the marginal cost of cleaning one more office. Draw a diagram to show the variable cost, average variable cost, and the marginal cost curves.;2. Suppose the government increases payroll taxes to 25% of a workers wage. What effect will this tax have on the firm?s choice of labor and capital to produce a given level of output?;3. Given the formulas for and plot AFC, MC, AVC, and AC if the cost function is;C = 10 + q2;4. In late 2004 and early 2005, the price of raw coffee beans jumped as much as 50% from the previous year. In response, the price of roasted coffee rose about 14%. Why would firms increase the price less than in proportion to the rise in the cost of raw beans?;5. Mercedes-Benz of San Francisco advertises on the radio that it has been owned and;operated by the same family in the same location for 48 years (as of 2010). It then makes two claims: first, that because it has owned this land for 44 years, it has lower overhead than other nearby auto dealers, and second, because of its lower overhead, it charges a lower price on its cars. Discuss the logic of these claims.;6. Show diagrammatically the effects of a specific sales tax on welfare as the elasticity of demand changes. Who is relatively harmed more as the elasticity of demand increases ? consumers or producers?;7. In 2002, Los Angeles imposed a ban on new billboards. Owners of existing billboards did not oppose the ban. Why? What are the implications of the ban for producer surplus;Consumer surplus and welfare? Who are the producers and consumers in your analysis? Who else does the ban affect welfare in Los Angeles?;8. A government is considering implementing a tariff or a quota. Ceteris paribus, why might the government prefer one intervention over the other?;9. A city centre imposes a rent control law that places a binding ceiling on the rent that can be charged for an apartment. The suburbs of this city do not have rent control. What happens to the rental prices in the suburbs and to the equilibrium number of apartments in the total metropolitan area, in the city centre and in the suburbs? Hint: assume that people are indifferent between living in the city centre or the suburbs.;10. The demand functions for Q1 and Q2 are;Q1 = 10 ? 2p1 + p2;Q2 = 10 ? 2p2 + p1;There are 10 units of each good. What is the general equilibrium?


Paper#29409 | Written in 18-Jul-2015

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