Homework_3 - Points Awarded 93.52 Points Missed 6.48...

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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 B TABLE B- The wage is still $150 and the price of output (Q) is now $22. L Q MP L MRP Marginal Profit Total Profit 0 0 ---- ---- ------------- 0 1 8 8 $ $ $ 2 20 12 $ $ $ 3 28 8 $ $ $ 4 35 7 $ $ $ 5 41 6 $ $ $ 6 45 4 $ $ $ Points Earned: 9.0/9.0 Correct Answer(s): Box 1: 176; Box 2: 26; Box 3: 26; Box 4: 264; Box 5: 114; Box 6: 140; 176 26 26 264 114 140 176 26 166 154 4 170 132 -18 152 88 -62 90
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Box 7: 176; Box 8: 26; Box 9: 166; Box 10: 154; Box 11: 4; Box 12: 170; Box 13: 132; Box 14: -18; Box 15: 152; Box 16: 88; Box 17: -62; Box 18: 90 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 Correct Answer(s): 35 3. (3 points) The profit maximizing level of labor (L) input is workers. Points Earned: 3.0/3. 0 Correct Answer(s): 4 4. 35 4
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(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 new MRP 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
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Correct Answer(s): 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.
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  • Fall '10
  • staff
  • Macroeconomics, $ 5 51 8, $ 6 55 4, $160 4 35 7, $240 3 28 8

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