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

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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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## This note was uploaded on 04/25/2010 for the course ECON econ302 taught by Professor Rahman during the Spring '10 term at Fairmont State.

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

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