Written Assignment 3

Written Assignment 3 - Written Assignment 3/Principles of...

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Unformatted text preview: Written Assignment 3/Principles of Microeconomics N. Gregory Mankiw- Fifth Edition ISBN 0324- 58998-0) Answer all of the following questions. Title your assignment "Written Assignment 3," unless your mentor directs otherwise. This assignment covers text chapters 13 through 17. 1. At its current level of production, a profit-maximizing firm in a competitive market receives $12.50 for each unit it produces and faces an average total cost of $10. At the market price of $12.50 per unit, the firm's marginal cost curve crosses the marginal revenue curve at an output level of 1000 units. What is the firm's current profit? What is likely to occur in this market, and why? Profit = (12.50-10.00) * 1000= 2,500. Correct Based on the firms current revenue, I believe this firm will remain in the market until its profit is zero. The firms marginal revenue is greater than its marginal cost, it makes sense for it to remain in the market. 2. In order to determine whether time is being spent optimally, a commercial fisherman has recorded the following information over the past year: "hours spent fishing" and "quantity of fish caught." What is the marginal product of fishing for hour spent? Hours/day Total Quantity of Fish (tons) Marginal Product 1 10 10 2 18 8 3 24 6 4 28 4 5 30 2 6 31 1 correct 3. The fisherman has a fixed cost of $200 per day and variable costs of $150 per hour (wages and fuel). a. Fill in the information missing in the following table. Hours/ day Total Fixed Costs Total Variable Costs Total Costs Marginal Costs 1 $200 $150 $350 $350 2 $400 $300 $700 $350 3 $600 $450 $1050 $350 4 $800 $600 $1400 $350 5 $1000 $750 $1750 $350 6 $1200 $900 $2100 $350 Fixed costs do not change. They stay the same no matter how many units are produced. This is why they are referred to as fixed costs. Written Assignment 3/Principles of Microeconomics N. Gregory Mankiw- Fifth Edition ISBN 0324- 58998-0) Hours/ day Total Fixed Costs Total Variable Costs Total Costs Marginal Costs $200 $200 1 $200 $150 $350 $150 2 $200 $300 $500 $150 3 $200 $450 $650 $150 4 $200 $600 $800 $150 5 $200 $750 $950 $150 6 $200 $900 $1100 $150 b. The fish sell for $100 a ton. How many hours fishing per day will he work in order to earn a maximum profit on his day's activity? And how much is that profit? Please show all your calculations....
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Written Assignment 3 - Written Assignment 3/Principles of...

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