Chapters%205%20%26%206%20Practice%20B

Chapters 5%2 - Chapters 5 6 Practice B From Textbook(7th edition Chapter 5 page 130 R1 Suppose a farmer is deciding how many acres to spray The

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From Textbook (7 th edition): Chapter 5 page 130, R1: Suppose a farmer is deciding how many acres to spray. The crop duster charges $7 per acre. The total benefit of spraying is given in the following chart: # of acres sprayed total benefit marginal benefit total cost marginal cost net gain 0 $0 1 12 2 22 3 30 4 37 5 42 a. Fill in the remaining columns. b. Use Method #1 to determine how many acres the farmer should spray. c. Use Method #2 to determine how many acres the farmer should spray. d. If the crop duster adds a fixed fee of $5 to come out to the farm, how many acres should the farmer spray? Predict the answer without creating a new chart. Then create a chart to verify your prediction. e. If the crop duster raises his fixed fee to $10 per acre, how many acres should the farmer spray? page 132, #7: Suppose that Pat and Sandy’s restaurant has just installed fancy new décor costing $10,000. Suppose also that in a distant solar system, there is a planet identical in every way to Earth except that at this planet’s Pat and Sandy’s, the same redecoration cost $20,000. True or False: Pat and Sandy’s hamburgers will be more expensive in the distant solar system than on Earth. Explain. Chapter 6 page 164, R8: Define the marginal rate of technical substitution. page 165, R9: What is the relationship between the marginal products of the factors of production and the marginal rate of technical substitution? page 165, R11: Explain why firms want to operate at a tangency between an isoquant and isocost. page 165, R14: Explain how to derive the firm’s (short-run) total product and total cost curves from the isoquant diagram. How could these curves be affected by a change in the rental rate on capital? How would they be affected by a change in the wage rate of labor? page 165, R15:
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This note was uploaded on 03/14/2012 for the course ECON 2243 taught by Professor Henryfors during the Spring '12 term at Abant İzzet Baysal University.

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Chapters 5%2 - Chapters 5 6 Practice B From Textbook(7th edition Chapter 5 page 130 R1 Suppose a farmer is deciding how many acres to spray The

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