Homework 3 - Points Awarded 100.0 0 Points Missed Percentage 0.00 100 1 SCENARIO B Suppose that due to favorable economic conditions the price that this

Homework 3 - Points Awarded 100.0 0 Points Missed...

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Points Awarded 100.0 0 Points Missed 0.00 Percentage 100% 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. 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 $ $ $ Table for Individual Question Feedback Points Earned: 9.0/9.0 176 26 26 264 114 140 176 26 166 154 4 170 132 -18 152 88 -62 90
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 . Table for Individual Question Feedback Points Earned: 3.0/3.0 3.(3 points) The profit maximizing level of labor (L) input is workers. Table for Individual Question Feedback Points Earned: 3.0/3.0 4.(3 points) The maximum profit for this firm is . Table for Individual Question Feedback Points Earned: 3.0/3.0 35 4
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’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.Table for Individual Question Feedback Points Earned: 3.0/3.0
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 answerfor #2 above). Connect the two points and label your supply curve.

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