Homework Set 3 - Homework Set 3: Chapters 6 & 7 Eco...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Eco F304K Summer, 2008 Due Date: 6/26/08   Chapter 6: Perfect Competition 1. The following exercise reviews calculation of total revenues, total costs and profits for a firm Output Employee  Hours Output  Price Rent Wage  Rate Total  Revenues Total Costs Profits/Losse s 0 0 $3 $75 $4 15 3 $3 $75 $4 30 7 $3 $75 $4 45 12 $3 $75 $4 60 18 $3 $75 $4 75 25 $3 $75 $4 90 37 $3 $75 $4 A. Calculate the values for total revenues, total costs, and profits or losses (use a minus sign for losses). B. For the data in table, the profit-maximizing level of output is (75/90) _______ units, with a profit of ($47/$50) _____. C. Suppose that the rent on the office space the firm is using increased from $75 to $95 while all other variables remain  unchanged. The new profit-maximizing level of output is (60/75) ______ units with a (profit/loss) _______ of ($30/-$30)  _________. D. The results in part C indicate that when the cost of a (fixed/variable) ______ factor of production change, the optimal level of  production (remains the same/changes) _______, but the level of profits or losses (remains the same/changes)  _____________. E. Suppose the price the firm receives increases from $3 to $5, while all other variables are at the original values.  The new  profit-maximizing level of output is (75/90) ______ with a profit of ($227/$200) ______. 2. The relationship between total costs, marginal costs, and profit maximization is examined in this question.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

Homework Set 3 - Homework Set 3: Chapters 6 & 7 Eco...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online