homework7-2010 - Homework 7 Econ review I Profit-maximizing...

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Homework 7, Econ review ______________________________ I. Profit-maximizing point (unrestricted variable input). The table below shows the relationships between different levels of a variable input and the corresponding output (per acre) with all other inputs held constant. Complete the table and answer the questions that follow. Assume the variable input costs $2.00 each and the output sells for $3.00 each. Fixed costs are $40 per acre. Input Output Total Total Total Average Marginal Marginal Marginal Marginal Marginal Revenue Variable Cost Physical Physical Value Input Revenue Cost Cost Product Product Product Cost 0 0 XXXX XXXX XXXX XXXX XXXX XXXX 5 10 10 22 15 31 20 37 25 41 30 43 35 44 40 43 45 41 Fill in the blanks below for the profit-maximizing point. _________ input level ________________ output level ____________ profit II. Equi-marginal principle (restricted input). Mr. I.M. Lazy has three fields planted and has decided to limit his time at work this next month to no more than 80 hours. He has calculated the following returns for his time on three enterprises.
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