• 143

This preview shows page 42 - 48 out of 143 pages.

11. SCENARIO C- We return to the original conditions (from scenario A) and now we let wages change. In particular, an increase in labor supply lowers the wage that the firm needs to pay to \$130.For question 11. Fill in Table C - Each box is worth ½ point for a total of 6 points for Table CTABLE C- The wage has changed to \$130 but the price of output (Q) is backat its original value of \$20. L Q MP L MRP Marginal Profit Total Profit
0 0 ----- ----- ------------ 0 1 8 8 \$160 \$ 30 \$ 30 2 20 12 \$240 \$ 110 \$ 140 3 28 8 \$160 \$ 30 \$ 170 4 35 7 \$140 \$ 10 \$ 180 5 41 6 \$120 \$ -10 \$ 170 6 45 4 \$80 \$ -50 \$ 120 Table for Individual Question Feedback Points Earned: 6.0/6.0 Correct Answer(s):Box 1: 30;Box 2: 30;Box 3: 110;Box 4: 140;Box 5: 30;Box 6: 170;Box 7: 10;Box 8: 180;Box 9: -10;Box 10: 170;Box 11: -50;Box 12: 120Correct Answer(s): 12. Use Scenario C/Table C to answer the questions 12 – 14 below. (3 points) The profit maximizing output is 35 . Table for Individual Question Feedback Points Earned: 3.0/3. 0 35
13. (3 points) The profit maximizing level of labor input is 4 workers. Table for Individual Question Feedback Points Earned: 3.0/3. 0 Correct Answer(s): 4 14. (3 points) The maximum profit for this firm is 180 . Table for Individual Question Feedback Points Earned: 3.0/3. 0 Correct Answer(s): 180 15. (2 points) Using Scenario C/Table C, go to Graph 1 . Label the profit maximizing Q and L combination as point C. Table for Individual Question Feedback Points Earned: 2.0/2.0
Correct Answer(s): 16. (3 points) Using Scenario C/Table C, go to Graph 4 and draw in this firm’s new wage line. The MRP curve is unchanged since MRP = P* MPL, and neither P nor MPL has changed. Shade in the new area for profit. Also label the profit maximizing point as letter C. Table for Individual Question Feedback Points Earned: 3.0/3.0
Correct Answer(s): 17. (3 points) Using Scenario C/Table C, go to graph 3 and add this firm’s new supply curve (remember that wages fell, so output supply increases). Label as point C the price and output combination occurring after the change in economic conditions in Scenario C (P= \$20, and the profit maximizing Q you found in your answer for #12 above). You only have one point on this supply curve, but you can sketch it as an upward sloping supply curve that is parallel to the supply curve you drew earlier. Table for Individual Question Feedback Points Earned: 3.0/3.0 Correct Answer(s): 18. (2 points) When comparing Scenario A to Scenario C, the firm now hires _______
Table for Individual Question Feedback Points Earned: 2.0/2. 0 Correct Answer(s): A
• • • 