WS2A4 - WS2A4 1 WS2A4 Mary Batchelor Indiana Wesleyan...

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WS2A4 1 WS2A4 Mary Batchelor Indiana Wesleyan University
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WS2A4 Chapter 5 9. Suppose that 50 units of a good are demanded at a price of $1 per unit. A reduction in price to $0.20 results in an increase in quantity demand to 70 units. Show that these data yield a price elasticity of 0.25. By what percentage would a 10 percent rise in the price reduce the quantity demanded, assuming price elasticity remains constant along the demand curve? .25=.05/.20 .25=x/.22 X=0.055 70*0.055=3.85 less demanded Chapter 7 18. Complete the following table, assuming that each unit of labor costs $75 per day. Quantity of labor per day output per day Fixed costs Variable Cost Total Cost marginal Cost 0 $0 $300 0 300 - 1 5 300 75 375 15 2 11 300 150 450 12.5 3 15 300 225 525 18.75 4 18 300 300 600 25 5 20 300 375 675 37.5 a. Graph the fixed costs, variable cost, and total cost of curves for this data.
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b. What is the marginal product of the third unit of labor? 6.25 c. What is the average total cost when output is 18 units per day? 33.33 21. Suppose the firm has only three possible scales of production as shown below a. Which scale of production is most efficient when Q=65?
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