PSU ECON 104 Homework 3 - Points Awarded 91.75 Points Missed Percentage 8.25 91.8 1 SCENARIO B Suppose that due to favorable economic conditions the

# PSU ECON 104 Homework 3 - Points Awarded 91.75 Points...

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Points Awarded91.75Points Missed8.25Percentage91.8%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 MPLMRP Marginal Profit Total Profit 0 0 ---- ---- ------------- 0 1 8 8 \$176\$26\$262 20 12 \$264\$114\$1403 28 8 \$176\$26\$1664 35 7 \$154\$4\$1705 41 6 \$132\$-18\$1526 45 4 \$88\$-62\$90Table for Individual Question Feedback Points Earned: 9.0/9.0
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 35. Table for Individual Question Feedback Points Earned: 3.0/3.0
3. (3 points) The profit maximizing level of labor (L) input is 4workers. Table for Individual Question Feedback Points Earned: 3.0/3.0 Correct Answer(s):4 4. (3 points) The maximum profit for this firm is 170. Table for Individual Question Feedback Points Earned: 3.0/3.0
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.
Table for Individual Question Feedback Points Earned: 2.0/2.0 Correct Answer(s):6. (3 points) Using Scenario B/Table B, go to Graph 2 and draw this firm’snew 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. Table for Individual Question Feedback Points Earned: 3.0/3.0 Correct Answer(s):7.
(3 points) Using Scenario B/Table B, draw this firm’s Supply curve onGraph 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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