pg 307 - Managerial Econom ics (MG608) A s ignm ent #4...

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Unformatted text preview: Managerial Econom ics (MG608) A s ignm ent #4 Victor Sm ith D ate: 02/24/20 3 Textbo k Problem s p307 #3) Production function MP a) Diminsihing returns begin at L = 4 (workers) dMPL / dL = 0 = 12 - 3L 12 = 3L 4 = L b) Identify the thre production stages Labor (L) Quantity (Q) MPL APL MRP (P=$10)MRP (P=$7.50)Production Stages 50.0 50.0 $50 .0 $375.0 1 56 60.50 5 .50 $605.0 $453.75 Stage 1 Increasing Returns 2 120 68.0 60.0 $680.0 $510.0 Stage 1 Increasing Returns 3 191 72.50 63.50 $725.0 $543.75 Stage 1 Increasing Returns 4 264 74.0 6 .0 $740.0 $5 5.0 Stage 1 Increasing Returns 5 3 8 72.50 67.50 $725.0 $543.75 Stage 1 Increasing Returns 6 408 68.0 68.0 $680.0 $510.0 Stage 1 Increasing Returns 7 473 60.50 67.50 $605.0 $453.75 Stage 2 Diminishing Returns 8 528 50.0 6 .0 $50 .0 $375.0 Stage 2 Diminishing Returns 9 572 36.50 63.50 $365.0 $273.75 Stage 2 Diminishing Returns 10 60 20.0 60.0 $20 .0 $150.0 Stage 2 Diminishing Returns 1 61 0.50 5 .50 $5.0 $3.75 Stage 2 Diminishing Returns 12 60 (2 .0 ) 50.0 ($2 0.0 ) ($165.0 ) Stage 3 Decreasing Returns c) Labor (L) Quantity (Q) Wages ($10/ Revenue ($10Profit ($10) Rev ($7.50) Profit ($7.50) $0.0 $0.0 $0.0 $0.0 $0.0 1 56 ($40 .0 ) $5 5.0 $15 .0 $416.25 $16.25 Stage 1 Increasing Returns 2 120 ($80 .0 ) $1,20 .0 $40 .0 $90 .0 $10 .0 Stage 1 Increasing Returns 3 191 ($1,20 .0 ) $1,905.0 $705.0 $1,428.75 $2 8.75 Stage 1 Increasing Returns 4 264 ($1,60 .0 ) $2,640.0 $1,040.0 $1,980.0 $380.0 Stage 1 Increasing Returns 5 3 8 ($2,0 0.0 ) $3,375.0 $1,375.0 $2,531.25 $531.25 Stage 1 Increasing Returns 6 408 ($2,40 .0 ) $4,080.0 $1,680.0 $3,060.0 $6 0.0 Stage 1 Increasing Returns 7 473 ($2,80 .0 ) $4,725.0 $1,925.0 $3,543.75 $743.75 Stage 2 Diminishing Returns 8 528 ($3,20 .0 ) $5,280.0 $2,080.0 $3,960.0 $760.0 Stage 2 Diminishing Returns 9 572 ($3,60 .0 ) $5,715.0 $2,1 5.0 $4,286.25 $686.25 Stage 2 Diminishing Returns 10 60 ($4,0 0.0 ) $6,0 0.0 $2,0 0.0 $4,50 .0 $50 .0 Stage 2 Diminishing Returns 1 61 ($4,40 .0 ) $6,105.0 $1,705.0 $4,578.75 $178.75 Stage 2 Diminishing Returns 12 60 ($4,80 .0 ) $6,0 0.0 $1,20 .0 $4,50 .0-$30 .0 Stage 3 Decreasing Returns Shows profit maximizing point (al other costs constant) With price change from $10 to $7.50, reduce employe s from 9 to 8....
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pg 307 - Managerial Econom ics (MG608) A s ignm ent #4...

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