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h3f10 - ECO 304K INTRO MICRO Fall 2010 Hickenbottom...

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ECO 304K INTRO MICRO Fall 2010 Hickenbottom HOMEWORK #3 (Due October 20 at 12pm) 1. A firm has the following Total Product function Labor Output Labor Output Labor Output 0 0 4 69 8 105 1 12 5 86 9 106 2 30 6 100 10 106 3 50 7 110 a) Find the Marginal Product and use this information to determine where diminishing returns sets in. (1 point) b) If labor costs $684 per unit, find the Marginal cost at Q = 20, Q= 50 and Q = 69. Round any decimal answers to 1 place. Explain how these answers are consistent with the MP you found in (a). (1 point) 2. Answer the following based on the table below which is the cost of one firm in a perfectly competitive market. Q FC VC TC MC AVC AFC ATC 0 NA NA NA NA 1 10 2 9.5 3 273 4 70.75 5 296 10 6 17 7 90 8 46 9 414 10 23.4 a) Fill in the missing items in the following table. I would suggest you complete the table, cut it out, and paste it (either electronically or physically) into your sheet you turn in. (1 point) b) Find the profit maximizing quantity and profit for firm in the short run if the price is $30. Do the same when the price is $8.5. (2 points)
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3. The short run variable costs below are for a firm in a perfectly competitive
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