Marginal Product becomes equal to Average Product is_ a. Additional Cost is equal to the additional output produced b. Additional Output produced is equal to the output per unit of input used c. Output per unit exceeds the additiona output produced per unit of input used d. Output per unit exceeds the additiona cost O Option 5
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- A firms marginal cost curve above the average variable cost curve is equal to the films individual supply curve. This means that every time a firm receives a price from the market it will be willing to supply the amount of output where the price equals marginal cost. What happens to the films individual supply curve if marginal costs increase?An SMSE has a production process with fixed lot size A. The table belowshows the total output and the number of workers:No. of Workers (L) Total Output (Q) 0 0 1 10 2 30 3 50 4 56 5 59 6 60 7 60 8 58(a) Determine marginal productivity of labour and average productivity oflabour for each unit of labour. (b) Show the three stages of production (c) Suppose the market price of the output Rs. 150 and the wage rate isRs. 900, how many workers would this firm hire? What if the pricedecreases to Rs. 100?(d) Suppose the market price increases to Rs. 250, what is the highestwage rate the firm would be willing to pay to…a) Derive the goods market demand curve in terms of the output (Y) and the exogenousvariables:c0,c1,b0,b1,g0,g1andT. Show your work for full credit. b)Draw the Goods Market Equilibrium. Be sure to label all curves, label the equilibrium point, and label the slope of each curve. c)Solve for the equilibrium output (Y) in terms of the exogenous variables:c0,c1,b0,b1,g0,g1andT. Show your work for full credit. d)Supposeg1increases, but stillc1+b1+g1<1. Using a graph of the goods market, show how we would represent an increase in the value ofg1on equilibrium output y. Be sure to label all axes, curves, and equilibrium points. e)Suppose instead,c1+b1+g1= 0. Is the equilibrium in the goods market still possible? If so, what is the equilibrium output? You must explain your answer to receive full credit.
- The nation of Ectenia has 20 competitive appleorchards, all of which sell apples at the world priceof $2 per apple. The following equations describethe production function and the marginal product oflabor in each orchard:100100 2 ,2 5 25 2Q L LMPL Lwhere Q is the number of apples produced in a day,L is the number of workers, and MPL is the marginalproduct of labor.a. What is each orchard’s labor demand as a functionof the daily wage W? What is the market’s labordemand?b. Ectenia has 200 workers who supply their laborinelastically. Solve for the wage W. How manyworkers does each orchard hire? How much profitdoes each orchard owner make?c. Calculate what happens to the income of workersand orchard owners if the world price doubles to$4 per apple.d. Now suppose that the price is back at $2 perapple but a hurricane destroys half the orchards.Calculate how the hurricane affects the income ofeach worker and of each remaining orchard owner.What happens to the income of Ectenia as a whole?(a) Derive the first order condition showing how much labor and capital a producer should use to minimize the total costs of producing a given level of output. (b) What is the second order condition for the producer to achieve (a). (c) Draw a figure showing your answer to part (a) and another figure showing the opposite (i.e., a producer maximizing output with given total costs). How does either situation compare with a producer who has neither a total output constraint or a total cost constraint?A firm produces two different kinds, A and B, of a commodity. The daily cost of producingx units of A and y units of B isC(x, y) = 2x2 − 4xy + 4y2 − 40x − 20y + 514Suppose that the firm sells all its output at a price per unit of $24 for A and $12 for B. Findthe daily production levels x and y that maximize profit. (Be sure to show your first andsecond order conditions.)
- A firm uses a single input to produce a commodity according to itsshort-run production function f(x) = 4√x, where x is the number of units ofinput. The commodity sells for $100 per unit. The input cost $50 per unit.(a) Write down a function that states the firm’s profit as a function ofthe amount of input.(b) What is the profit maximizing amount of input and output?(c) Suppose the firm is taxed $20 per unit of its output and the priceof its input is subsidized by $10, explain in detail how this will affect the newinput and output levels?Number of workers Total products Marginal product Fixed cost variable cost Marginal cost 0 0 $100 $0 1 900 $100 $100 2 1900 $100 $200 3 2400 $100 $300 (A) The highest productivity level (AP) of worker is achieved at which number of worker? Prove your opinion WIth calculation. (B) At each number of workers, calculate the marginal product (MP) and determined at which level of worker does diminishing marginal product begin? (C) Calculate the total cost used to produce 2400 units of Good Y. (D) Calculate the marginal cost (MC) at each level of worker Leave answers in 2 decimal place.Consider a manufacturing firm in a labor market that isperfectly competitive. There are two kinds of workers: productiveworkers whose marginal revenue product is $48,000 per year, andlazy workers whose marginal revenue product is $40,000 per year. Itis difficult for the firm to differentiate between productive andlazy workers. A local college offers a new yearlong astronomy course. Althoughthe cost of tuition is the same for both types of workers, thepsychic cost of having to work hard and get a passing grade islower for productive workers because they are able to learn morequickly than lazy workers. Therefore, the cost of taking the class(including the cost of tuition as well as the psychic cost) is$5,000 per year for a productive worker and $10,000 per year for alazy worker. Because astronomy has little relevance tomanufacturing, taking the class does not increase or decrease aworker's productivity. The firm uses the class as a way to differentiate betweenproductive and lazy…
- In the accompanying diagranm, whach phase of the buniness cyde would be most cosoly asocated with an econome conacton O A. D O B. C O C. A O D. BNumber ofWorkersEmployed Output(Units) MarginalProduct(Units) Value ofMarginalProduct ($)(Market Price=1$) Value ofMarginalProduct ($)(Market Price=2$) 0 0 1 8 2 22 3 36 4 56 5 60 6 72 7 82 8 89 Derive Marginal Product and Value of Marginal Product from the following table when market price for the product is 1$ and 2$ .COURSE: MICROECONOMICS - PRODUCTION THEORY Suppose a company engaged in manufacture of wheat whose production function is represented by: Q =10KL.In addition, firm must pay wages of $200 and rent on capital is $600. It is known that firm has a budget of $30,000 for cheese production.a) Calculate break-even point of both factors of production and graph itb) What will happen if minimum wage is now fixed at $300? Graph itc) Assuming that new minimum wage at point b) is maintained and, assuming that investor demands a capital rent of $900, explain what happens to optimal factor level. Graph it
