practice_quiz2_3 - Elements of Microeconomics Quiz 2 Prof...

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Elements of Microeconomics Quiz 2 Prof. Bruce Hamilton 1. Consider a perfectly competitive market for Durian. w=10. Assume the price be 15. There are no fixed costs. Fill in the table below AS NEEDED to answer the questions that follow. Labor Total output MPL VMPL ATC 1 5 2 10 3 16 4 20 5 23 6 25 7 26 (a) Determine optimal labor employment (b) Let the fixed cost of producing Durian be $40. Now calculate the profit that the firm would make. (c)What can you expect to happen to each of the following in the long run? Profit per firm Price
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(d) Sketch the ATC (Average Total Cost) curve. (You don’t need to draw it to scale.) Why does it have the basic shape that it has? 2. Joseph Buckheit is the owner of a business which employs 10 workers. Fabio Palacio is a typical employee of this company. Assume all other workers are just like him. Fabio considers leisure and consumption as the 2 goods that he wants. Assume wage rate per hour is w 0 . Let the price of good X be 1.
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