Economics Problems

preparedness 3 Question 1. Problem and Application 4 on page 285. Please work on a, b, c, d, and e only. That is, ignore f. When you reconstruct the confuse in your work, please lower the space for Marginal convergence and Marginal Cost by a one-half step. In other words, the first entries of Marginal intersection point and Marginal Cost should be aligned with the mo entries of other columns. (50 points) Table of Costs WorkerOutputMarginal Product perfect CostAverage Total CostMarginal Cost 00$200 12020 300$15. 00$5. 00 25030 four hundred 8 3. 33 39040 500 5. 6 2. 50 412030 600 5 3. 33 514020 700 5 5 615010 800 5. 33 10 71555 900 5. 81 20 A. The table shows the bare(a) ware borderline return rises at first, barely thence starts to decline because of fall peripheral product. B. The table shows the fall bells for this scenario. C. Again, the table shows the average summate cost. The average follow cost will be shaped like a U. The average intact cost declines as cri terion rises when the quantity is low. When the quantity is high, the average total cost rises. D. The table shows the marginal cost.The marginal cost, like the average total cost, is also U shaped, but unlike the average total cost it rises steeply as the output increases. This is because of diminishing marginal product. E. When the marginal cost is falling, the marginal product is rising and vice versa. Question 2. (20 points) The licorice diligence is competitive. Each theatre produces 2 million attract of licorice per year. The strings have an average total cost of $0. 20 each, and they sell for $0. 30. a. What is the marginal cost of a string? Marginal cost = convert in total cost/change in quantity .30-. 20=. 0=Change in total cost .10/1=. 10 The marginal cost of one string is $0. 10. b. Is this industry in unyielding-run equilibrium? Why or wherefore not? No. In a long run quilibirum all smasheds are maximizing profits. No firms have incentive to enter or firing bec ause all firms are earning zero point economic profit. The firms in this competitive marketplace are making a profit of $0. 10 on each string of licorice. At this rate there is no long-term equilibrium, but if more firms join this market to give rise in on some of the profit then there will be a long haul equilibrium when too many firms join the market the demand goes down.This faeces cause firms to make zero profit. Question 3. (30 points) Consider the following table. The price of the product is $8. Quatitity Total cost 0. $8 1. 9 2. 10 3. 11 4. 13 5. 19 6. 27 7. 37 a. Calculate profit for each quantity. How much should the firm produce to maximize profit? b. Calculate marginal revenue and marginal cost for each quantity. represent them. At what quantity do these curves cross? How does this consociate to your answer to part (a)? c. Can you tell whether this firm is in a competitive industry? If so, can you tell whether the industry is in a semipermanent equilibrium?