Homework_3 - Points Awarded 93.52 Points Missed 6.48 Percentage 93.5 1 SCENARIO B Suppose that due to favorable economic conditions the price that this

# Homework_3 - Points Awarded 93.52 Points Missed 6.48...

• Homework Help
• 16
• 97% (76) 74 out of 76 people found this document helpful

This preview shows page 1 - 6 out of 16 pages.

Points Awarded 93.52 Points Missed 6.48 Percentage 93.5 % 1.SCENARIO B: Suppose that due to favorable economic conditions, the price that this firm can sell its product for rises to \$22.For question 1. Fill in Table B - Each box is worth ½ point for a total of 9 points for Table BTABLE B- The wage is still \$150 and the price of output (Q) is now \$22.LQMPLMRPMarginal ProfitTotal Profit0 0---------------------01 88\$\$\$2 2012\$\$\$3 288\$\$\$4 357\$\$\$5 416\$\$\$6 454\$\$\$Points Earned:9.0/9.01762626264114140176261661544170132-1815288-6290
2.Use Scenario B/Table B to answer the questions 2 – 4 below.(3 points) The profit maximizing output (Q) is . Points Earned: 3.0/3. 0 3.(3 points) The profit maximizing level of labor (L) input is workers. Points Earned: 3.0/3. 0 4. 35 4
(3 points) The maximum profit for this firm is . Points Earned: 3.0/3. 0 Correct Answer(s): 170 5. DOWNLOAD AND PRINT GRAPHING TEMPLATE (available in the homework 3 instructions). This template already shows the outcome from scenario A. You will be adding results from scenario B to these graphs. (2 points) Using Scenario B/Table B, go to Graph 1 . Label the new profit maximizing Q and L combination on the production function as point B. B and C are on the given curve. Points Earned: 0.0/2.0 Correct Answer(s): 6.(3 points) Using Scenario B/Table B, go to Graph 2 and draw this firm’s newMRP curve (remember that MRP = P* MPL, and since price changed, we know we have a new MRP curve!). Shade in the new area of profit. Also label the new profit maximizing point as letter B. Points Earned: 3.0/3.0 170
7.(3 points) Using Scenario B/Table B, draw this firm’s Supply curve on Graph 3. You should construct a supply curve as we did in lecture with point A representing the original price and output combination from scenario A (original price was \$20 combined with the profit maximizing Q of 28) and point B representing the price and output combination after the change in economic conditions in Scenario B (price rose to \$22, and the profit maximizing Q you found in your answer for #2 above). Connect the two points and label your supply curve. Points Earned: 3.0/3.0