100%(32)32 out of 32 people found this document helpful
This preview shows page 10 - 15 out of 16 pages.
SCENARIO D - In this final scenario, we again return to our original conditions (from scenario A) and consider a positive productivity shock, just like we did in the lectures. In particular, let the MPLof each worker rise by two, due to an increase in total factor productivity(denoted A in the lecture), relative to the initial conditions.For question 21, fill in Table D. Each box is worth ½ point for a total of 15 points for Table DTABLE D- The wage is $150 and the price of output (Q) is $20.L QMPLMRPMarginal ProfitTotal Profit0 0---------------------01$$$2$$$3$$$4$$$5$$$6$$$1010200505024142801301803410200502304391803026051816010270576120-30240
Table for Individual Question FeedbackPoints Earned:15.0/15.0
22.Use Scenario D/Table D to answer the questions 22 – 24 below.(3 points) The profit maximizing output is .Table for Individual Question FeedbackPoints Earned:3.0/3.023.(3 points) The profit maximizing level of labor input is workers.Table for Individual Question FeedbackPoints Earned:3.0/3.024.(3 points) The maximum profit for this firm is .Table for Individual Question FeedbackPoints Earned:3.0/3.025.
(3 points) Using Scenario D/Table D, go to Graph 1.Draw your new production function (remember technology [total factor productivity] increased, shifting the production function!) Label the new profit maximizing Q and L combination as point D.Table for Individual Question FeedbackPoints Earned:3.0/3.0515
(3 points) Using Scenario D/Table D, go to Graph 5 and draw this firm’s new MRP curve (remember that MRP = P* MPL, and since MPL has 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 D.Table for Individual Question FeedbackPoints Earned:3.0/3.0