review3-2006

review3-2006 - Review Exam3 OfficeHours...

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Review Review Exam 3 Exam 3

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Office Hours Today 11 to 11:30  2:30 – 3:30 pm Tomorrow (Wednesday) 1:30 to 2:30
Announcements Exam has same basic format as last two exams. Covers chapters 6,7, and 8

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Exam 3 Covers Chapter 6 Chapter 7  Chapter 8 (the material I covered in class)

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Problem 1 Problem 3: MC = Py at 30 units of input. Input Output AP MP FC VC TC AFC AVC AC MC 0 0 x x 30 0 30 x x x x 10 40 4.00 4.00 30 30 60 0.75 0.75 1.50 0.75 20 100 5.00 6.00 30 60 90 0.30 0.60 0.90 0.5 30 120 4.00 2.00 30 90 120 0.25 0.75 1.00 1.5 40 130 3.25 1.00 30 120 150 0.23 0.92 1.15 3 50 135 2.70 0.50 30 150 180 0.22 1.11 1.33 6 60 130 2.17 -0.50 30 180 210 0.23 1.38 1.62
More information What is the shutdown price? At what output? What is the zero-profit price? At what output? Input Output AFC AVC AC MC 0 0 x x x x 10 40 0.75 0.75 1.50 0.75 20 100 0.30 0.60 0.90 0.5 30 120 0.25 0.75 1.00 1.5 40 130 0.23 0.92 1.15 3 50 135 0.22 1.11 1.33 6 60 130 0.23 1.38 1.62

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More information To find the shutdown price, find the smallest number in the AVC column.
More information To find the zero-profit price, find the smallest number in the AC column .

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More information What is the shutdown price? At what output? What is the zero-profit price? At what output? Input Output AFC AVC AC MC 0 0 x x x x 10 40 0.75 0.75 1.50 0.75 20 100 0.30 0.60 0.90 0.5 30 120 0.25 0.75 1.00 1.5 40 130 0.23 0.92 1.15 3 50 135 0.22 1.11 1.33 6 60 130 0.23 1.38 1.62 \$0.60 100 \$.90 100
Problem 2 Output TR Profit 0 0 -30 40 60 0 100 150 60 120 180 60 130 195 45 135 202.5 22.5 130 195 -15 Output Price * Output = TR Profit = TR- TC

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Problem 4 . Input Output AP MP FC VC TC AFC AVC AC MC 0 0 x x 60 0 x x x x 10 20 2 2 60 20 80 3 1 4 1 20 50 2.5 3 60 40 100 1.2 0.8 2 0.67 30 70 2.33 2 60 60 120 0.86 0.86 1.71 1 40 80 2 1 60 80 140 0.75 1 1.75 2
5) 5 pts. Find the profit-maximizing input level . 30 units of input. Py = \$1.00 6) 2 pts. Calculate profit at the profit-maximizing point above. 70*\$1-120 = \$-50. Loss is lower than fixed costs so producer would produce at a loss.

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Average and Marginal Cost Output (y) MC AC AVC Points deducted if MC doesn’t intersect AC and AVC at each minimum. Points deducted if AC doesn’t get closer to AVC as output increases
Problem 8 Fill in the blank for a firm that is using inputs following the least-cost rule Amount Marginal Product of last unit Price Input 1 200 10 \$1.0 Input 2 300 20_ \$2.0

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Problem 9 Fill in the blank for a firm that is using inputs following the least-cost rule Amount Marginal Product of last unit Price Input 1 300 60 \$5.0 Input 2 400 36_ \$3.0
Problem 10 Assume that the following situation exists for a firm producing 100 widgets. Amount

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review3-2006 - Review Exam3 OfficeHours...

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