Econ 342
Homework #1
McLeod
Due in class on Wednesday Feb 4.
Name (please print or type) ____________________________________
Penn State ID #
______________________________________________
Instructions: Please Read Carefully
Please print out this form.
There should be five separate sheets of paper.
There are a total
of 3 problems.
Please answer each problem completely.
After you have written your
answers, please staple the five sheets together at the top lefthand corner.
The first sheet is intended only as a cover sheet.
Do not write anything on the first sheet
except your name and Penn State ID #.
There are 100 possible points on this homework assignment.
You may work together, but
you MUST WRITE UP YOUR OWN WORK and TURN IT IN, IN PERSON, IN CLASS
on Wed February 4.
PLEASE STAPLE YOUR
HOMEWORK!!
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1.
(35 points) Suppose honey is produced in a beehive using bees and sugar.
Each honey
producer uses one beehive which she rents for $10 per month.
Producing q gallons of honey
requires spending 3q dollars per month on bees, and q
2
dollars per month on sugar.
a) (3 points) What is the total cost of producing honey for an individual honey producer?
TC = 10 + 3q + q
2
b) (3 points) What is the average cost of producing honey per month for an individual producer?
ATC = (10 + 3q + q
2
)/q
c) (8 points) In general, if the total cost of producing honey is a + bq + cq
2
, then the marginal
cost of producing honey is b + 2cq.
Assuming each honey producer operates as a pricetaker,
what is the supply curve for an individual producer?
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 Spring '09
 MCLEOD
 Supply And Demand, producer, cheating firm

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