Econ 101 Winter 2010 Problem Set 12

Econ 101 Winter 2010 Problem Set 12 - Economics 101...

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Problem Set 12 April 8 & 9 University of Michigan Winter 2010 Economics 101 Microeconomics
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Econ 101.400 Winter 2010 Question One (a) Widget production requires only one input: labor. Complete the following table to reveal information about the firm’s production function, the marginal product of labor, the price of output and the marginal revenue product of labor. Assume the firm is a price taker in the output market. L Q MPL P MRPL 1 15 2 220 3 36 4 6 5 46 80 (b) Assume the firm is also a price taker in the labor market. If the wage (i.e. the price per unit of labor) is $170, how many units of labor will be hired? How many units of output will be produced? Explain why. (c) Explain the relevance of the assumptions that the firm is a price taker in the labor and in the output markets. (d) When the wage is $170, what is the marginal cost of producing output between 36 and 42 units of output?
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Econ 101.400 Winter 2010 Question Two Suppose a firm produces output using two factors, labor and capital. The firm chooses to
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This note was uploaded on 04/20/2010 for the course ECON 101 taught by Professor Gerson during the Winter '08 term at University of Michigan.

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Econ 101 Winter 2010 Problem Set 12 - Economics 101...

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