Microeconomics: Private and Public Choice (MindTap Course List)
15th Edition
ISBN: 9781285453569
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 12, Problem 8CQ
To determine
Explain whether hiring of labor and capital minimizes the cost of dressmakers.
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Remembering the learning activity in Unit 3, the Gondwanaland chairman of production reported that the gosum berry growers could meet a demand of 700 barrels of gosum berries per month at a price of $70 per barrel.
Then the growers were plagued with a gosum berry bug infestation that reduced output, causing production to fall to only 600 barrels. This resulted in a price increase to $84 per barrel. The following table shows the chairman’s report:
Month
Monthly barrels of gosum berries demanded
Price per barrel
June
700
$70
July
600
$84
Using the midpoint method, show your work and calculate the price elasticity of demand for Gondwanaland gosum berries. Explain what this price elasticity of demand means?
Complete the table below by calculating what the monthly total revenue is for June, what the monthly total revenue is for July, and the change in total monthly revenue for these two months. How have these numbers changed?
(Enter your response…
Suppose that Maria is starting a food ordering and delivery company.
Customers order meals online. Employees prepare the meals and deliver them to customers.
Maintenance of the online platform for ordering meals costs the company $5 per day.
The company also rents space where orders are prepared. Rent costs $50 per day.
To make the deliveries, the business also rents two delivery cars that cost $10 each per day.
The costs of ingredients for preparing different numbers of meals are provided in the table below.
Maria also has to hire between 0 and 10 workers (depending on the number of meals she chooses to make) to buy ingredients, prepare meals, and deliver the orders.
She will pay each employee $120 per day.
The first two columns of the table below show how many meals different number of workers can prepare and deliver.
Price per meal
$50
Workers
(Labor L)
0
1
2
3
4
5
6
7
8
9
10
Meals
(Output Q)
ol-
30
42
52
60
67
73
79
85
90
95
MPL
FC
Cost of
ingredients
$10
$75
$100
$121
$138
$152…
Suppose that Maria is starting a food ordering and delivery company.
Customers order meals online. Employees prepare the meals and deliver them to customers.
Maintenance of the online platform for ordering meals costs the company $5 per day.
The company also rents space where orders are prepared. Rent costs $50 per day.
To make the deliveries, the business also rents two delivery cars that cost $10 each per day.
The costs of ingredients for preparing different numbers of meals are provided in the table below.
Maria also has to hire between 0 and 10 workers (depending on the number of meals she chooses to make) to buy ingredients, prepare meals, and deliver the orders.
She will pay each employee $120 per day.
The first two columns of the table below show how many meals different number of workers can prepare and deliver.
Price per meal
$50
Workers Meals (Output
(Labor L)
Q)
0
1
2
3
4
5
6
7
8
9
10
MPL
FC
Cost of
ingredients
VC
$10
$75
$100
$121
$138
$152
$165
$177
$189
$199
$210
TC
AFC
0…
Chapter 12 Solutions
Microeconomics: Private and Public Choice (MindTap Course List)
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