I the equilibrium rental price of machines in the

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Unformatted text preview: show each of the following. (i) The equilibrium rental price of machines in the factor market, labeled as PR (ii) John Lamb’s equilibrium rental quantity of machines, labeled as QL (b) Assume that the popularity of widgets declines, decreasing the demand for widgets. What will happen to each of the following? (i) Marginal product curve for machine-hours (ii) Marginal revenue product curve for machine-hours. Explain. (c) John Lamb is employing the cost-minimizing combination of inputs. The marginal product of labor is 28 widgets per worker hour and the wage rate is $14 per hour. The marginal product of the machine is 60 widgets per machine-hour. What is the hourly rental price of a machine? © 2010 The College Board. Visit the College Board on the Web: www.collegeboard.com. GO ON TO THE NEXT PAGE. -3- 2010 AP® MICROECONOMICS FREE-RESPONSE QUESTIONS 3. The graph above shows the perfectly competitive market for hard candies in Country Alpha. In the graph the letters correspond to points, not areas. MPC denotes marginal private cost and MSB d...
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