(3 points) The maximum profit for this firm is
.
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170
5.
DOWNLOAD AND PRINT GRAPHING TEMPLATE (available in the homework 3 instructions). This
template already shows the outcome from scenario A. You will be adding results from scenario B to
these graphs.
35
4
170

(2 points) Using Scenario B/Table B, go to
Graph 1
. Label the new profit maximizing Q and L combination on
the production function as point B.
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6.
(3 points) Using Scenario B/Table B, go to
Graph 2
and draw this firm’s new
MRP curve (remember that MRP
= P* MPL, and since price changed, we know we have a new MRP curve!). Shade in the new area of profit.
Also label the new profit maximizing point as letter B.
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7.
(3 points) Using Scenario B/Table B, draw this firm’s Supply curve on
Graph 3
. You should construct a supply
curve as we did in lecture with point A representing the original price and output combination from scenario A
(original price was $20 combined with the profit maximizing Q of 28) and point B representing the price and
output combination after the change in economic conditions in Scenario B (price rose to $22, and the profit
maximizing Q you found in your answer for #2 above). Connect the two points and label your supply curve.
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