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ECON 5055 Chapter 7 Brendan O’Neal

ECON 5055 Chapter 7 Brendan O’Neal - ii...

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Brendan O’Neal ECON 5705 Chapter 7 Exercises 1-4 Exercises 1. a. X TPx(=Q) MPx= (Q/X) Apx=Q/X 0 0 1 3 3 3 2 6 3 3 3 16 10 5.33 4 29 13 7.25 5 43 14 8.6 6 55 12 9.17 7 58 3 8.29 8 60 2 7.5 9 59 -1 6.56 10 56 -3 5.6 b. Graph – unable to get it into word document. c. Stage I 0 -6 AP x increasing Stage II 6 – 8 MPx> 0 Stage III 8 + MPx < 0 2. Variable Input (X) TPx Apx MPx 0 0 8 8 1 8 8 20 2 28 18 26 3 54 18 26 4 80 20 26 5 100 20 20
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6 108 18 8 7 98 14 -10 3. Crew Size TPx = Q Apx=Q/X Apx=Q/X 0 0 2 3 1.5 1.5 3 6 2 3 4 11 2.75 5 5 19 3.8 8 6 24 4 5 7 28 4 4 8 31 3.88 3 9 33 3.67 2 10 34 3.4 1 11 34 3.09 0 12 33 2.75 -1 i. increasing returns – 0 - 5
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Unformatted text preview: ii. constant return: zero iii. decreasing returns: 5 – 11 iv. negative returns: 11 – 12 b. Q = 34; crew size should be 10 to minimize output cost c. APx = 4.0; crew size of 6 to 7. 4. Optimum crew size is at value of 9, shown by the chart, in the 10 th line by marg revenue product and marginal factor cost at a value of 150....
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