Ex7301

# Ex7301 - What is the most that you would be willing to pay...

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What is the most that you would be willing to pay for an Ipod if you couldn’t get them any cheaper? 4 5 0 3 2 1 o r l e s 6% 4% 2% 5% 10% 16% 16% 12% 20% 9% 1. \$600 or more 2. \$500 3. \$450 4. \$400 5. \$350 6. \$300 7. \$250 8. \$200 9. \$150

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A firm can hire labor for \$50 per worker. It has no other costs. The value of its output is shown in the table below.To maximize profits, how many laborers should it hire? Number of workers Value of output 1 \$200 2 \$300 3 \$360 4 \$400 5 \$420 1% 6% 1% 2% 91% 1. 1 2. 2 3. 3 4. 4 5. 5
Why is that? Compare wage to marginal value product. Wage is \$50. # laborers Val output MVP 1 \$200 \$200 2 \$300 \$100 3 \$360 \$60 4 \$400 \$40 5 \$420 \$20

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A competitive firm can sell its output at \$10 per unit. The firm’s total costs are shown below. To maximize its profits how many units should it produce?

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## This note was uploaded on 12/25/2011 for the course ECON 1 taught by Professor Bergstrom during the Fall '07 term at UCSB.

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Ex7301 - What is the most that you would be willing to pay...

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