Markets and Resources

# Markets and Resources - and use 3 lbs of rubber Markets and...

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Markets and Resources Robert McGill BA 201 Microeconomics 27 March 2011 Markets and Resources 1. Marginal revenue product is defined as the change in total revenue that results from the employment of an additional unit of a resource. A widget producer wishes to determine how the addition of pounds of rubber will affect its MRP and profits. See the table below, and answer each of the questions. (40pts/10pts each) Pounds of rubber (quantity of resource) Number of widgets (total product) Price of widgets (\$) 0 1 2 3 4 5 0 20 35 45 50 53 - 12 10 8 6 4

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a. The marginal product of the 3 rd pound of rubber is 10 widgets . b. The marginal revenue product of the 3 rd pound of rubber is \$10 . c. The price of rubber is \$110 per pound. To maximize profit, the widget producer should produce 45 widgets. d. The price of rubber is \$110 per pound. To maximize profit, the widget producer should buy
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Unformatted text preview: and use: 3 lbs of rubber. __________________. Markets and Resources 2. See the table below, and answer each of the questions. (60pts/12pts each) a. If the market represented in exhibit above is allowed to operate freely, total employment in the market will be 720 employees . b. If a union raises the wage to \$4, total employment in the market will be 600 employees . c. The approximate total surplus of labor after the union wage is 120 employees . d. If the market is allowed to operate freely, total employment by the typical employer (illustrated in the right-hand panel) will be 12 employees . e. If a union raises the market wage to \$4, total employment by the firm (in the right-hand panel) will be 10 employees ....
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## This note was uploaded on 11/18/2011 for the course BUSINESS BA201 taught by Professor Kjkjkjkj during the Spring '08 term at Grantham.

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Markets and Resources - and use 3 lbs of rubber Markets and...

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