MICROECONOMICS (CUSTOMIZED CHAPTERS + C
21st Edition
ISBN: 9781307215267
Author: McConnell
Publisher: MCG CUSTOM
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Chapter 4, Problem 2RQ
To determine
Changes in output to achieve efficiency in production.
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Students have asked these similar questions
1) A manufacturer of breakfast cereals has the opportunity to purchase barley at $3.00 a
bushel for 10,000 bushels, if it also buys 5,000 bushels of wheat at $16.00 per bushel.
However, the manufacturer does not use any barley in its products, and currently needs
20,000 bushels of wheat. If the current market price of barley is $3.80 per bushel and that of
wheat is $15.80 per bushel, should this opportunity be taken, and why?
A) Because the company has no need of barley, the opportunity should not be taken.
B) Because the opportunity does not meet the company's need for wheat, the opportunity
should not be taken.
C) Because the value of the opportunity is positive, the opportunity should be taken.
D) Because the value of the opportunity is negative, the opportunity should not be taken.
Refer to the above diagram for athletic shoes.
Marginal
Cost
Marginal
Benefit
Quantity of shoes
If the current output of shoes is Q3, then:
society would consider additional units of shoes to be less valuable than
O 1)
alternative products.
2) resources are being allocated efficiently to the production of shoes.
society would consider additional units of shoes to be more valuable than
O 3)
alternative products.
4) society would experience a net gain by producing more shoes.
Marginal benefit
and marginal cost
(dollars)
Suppose that you own a 10-acre plot of land that you would like to rent out to wheat farmers. For them, bringing in a harvest involves $30 per acre for seed, $80 per acre for fertilizer, and $70 per acre for equipment rentals and labor. With these inputs, the land will yield 40 bushels of wheat per acre. If the price at which wheat can be sold is $5 per bushel and if farmers want to earn a normal profit of $10 per acre, what is the most that any farmer would pay to rent your 10 acres? What if the price of wheat rose to $6 per bushel?
Chapter 4 Solutions
MICROECONOMICS (CUSTOMIZED CHAPTERS + C
Ch. 4.A - Prob. 1ADQCh. 4.A - Prob. 2ADQCh. 4.A - Prob. 3ADQCh. 4.A - Prob. 1ARQCh. 4.A - Prob. 2ARQCh. 4.A - Prob. 3ARQCh. 4.A - Prob. 1APCh. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - Prob. 3DQ
Ch. 4 - Prob. 4DQCh. 4 - Prob. 5DQCh. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Prob. 8DQCh. 4 - Prob. 9DQCh. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 1PCh. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7P
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- Market demand is Qd = 100 - p. Market supply is Qs = 4p. A competitive firm has MC = 2Q. How %3! many units of output will the firm produce? O 10 O 20 33.3 O 15arrow_forward1. Rio live in a town with 300 adults and 200 children, and he is thinking about putting on a play to entertain your neighbors and make some money. A play has a fixed cost of $2,000 except all cost like maintenance costs until two years, but selling an extra ticket has zero marginal cost. Here are the demand schedules for his two types of customer: Price Adults Children $10 9 100 8 200 7 300 6 300 300 100 4 300 200 300 200 300 200 1 300 200 300 200 a. To maximize profit, what price would he charge for an adult ticket? For a child's ticket? How much the profit? (Hint: total cost for this year include fixed cost) b. Suppose in this year, the city council passes a law prohibiting him from charging different prices to different customers. What price does he set for a ticket now? How much profit now? (Hint: when quantity of produced yield maximum revenue or the sum of these both revenues sastify)arrow_forward18. How prices allocate resources Suppose that there are three plots of mountain resort land available for sale in Interlaken and six potential buyers, each interested in purchasing one plot. Assume that all of the plots are basically indistinguishable and that the minimum selling price of each is $745,000. The following table lists each potential buyer's willingness and ability to purchase a plot of land. Person Clancy Eileen Hubert Kate Manuel Poornima Willingness and Ability to Purchase (Dollars) 900,000 810,000 770,000 720,000 690,000 680,000arrow_forward
- 5. Suppose there is a Chinese firm that could produce a "widget" at a cost of 9qw, where qw is the number of widgets. It can then ship these widgets to a U.S. firm at a transport cost of $1 per unit and for a price of pw. The U.S. firm can then turn one widget into one car at a cost of $10. Cars are then sold on the world market, where inverse demand for cars is given by: P = 500-2Q. (a) If the Chinese firm is a perfect competitor, what is P = TU.S. = Q = qw= Pw= Chinese = (b) If the Chinese firm is a monopolist, what is P = = TU.S. Pw= qw= TChinese =arrow_forwardWith current technology, suppose a firm is producing 400 loaves of banana bread daily. Also assume that the least-cost combination of resources in producing those loaves is 5 units of labor, 7 units of land, 2 units of capital, and 1 unit of entrepreneurial ability, selling at prices of $ 40, $60, $60, and $20, respectively. Assume the firm can sell these 400 loaves at $ 2 per unit. 1). What is its total revenue? 2). What is its total cost? 3). What is the firm's profit or loss? The firm generates an economic ( choose one -a) loss, b) profit ) of...? 4). Will it continue to produce banana bread? ( Yes or No) 5). If this firm's situation is typical for the other makers of banana bread, will resources flow toward or away from this bakery good?arrow_forwardWith current technology, suppose a firm is producing 400 loaves of banana bread dally. Also assume that the least-cost combination of resources for producing those loaves is 10 units of labor, 7 units of land, 2 units of capital, and 1 unit of entrepreneurial ability, selling at prices of $20, $60, $60, and $20, respectively. Assume the firm can sell these 400 loaves at $2 per unit. Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. What is the firm's total revenue? What is its total cost? Calculate the amount of economic profit or loss. will R continue to produce banana bread? IClen to select If this firm's situation is typical for the other makers of banana bread, will resources flow toward or away from this bakery good? IClick to selecttarrow_forward
- Betty's Bakery bakes fresh bread every morning. Any bread not sold by the end of the day is thrown away. A loaf of bread costs Betty $2.00 to produce, and she prices loaves of bread at $3.50 per loaf. Suppose near the end of one day Betty still has 12 loaves of bread on hand. Which of the following is correct? O a. Betty should be willing to sell the remaining bread for any price above $0 per loaf since she will have to throw it away if she does not sell it for something. O b. Betty should only sell the remaining bread for $2.00 per loaf or more since that is what the bread costs to make. Oc. Betty should just throw the bread away and change the price of her bread starting tomorrow to make sure she sells all of her bread each day. Od. Betty should only sell the remaining bread for $3.50 per loaf since that is the regular price.arrow_forwardQuestion 3 Economies of scope are: O when one buyer or seller in a market has the ability to exert significant influence over the quantity of goods and services traded or the price at which they are sold. O when average unit costs decline as cumulative volume increases. when cost of producing and selling multiple products together is lower than the cost of producing and selling the same quantity of goods individually. when average unit costs decline as a good or service is produced or sold in larger volume.arrow_forward1. Rio live in a town with 300 adults and 200 children, and he is thinking about putting on a play to entertain your neighbors and make some money. A play has a fixed cost of $2,000 except all cost like maintenance costs until two years, but selling an extra ticket has zero marginal cost. Here are the demand schedules for his two types of customer: Price Adults Children $10 9. 100 8 200 7 300 300 300 100 4 300 200 300 200 300 200 1 300 200 300 200 c. Suppose next year government imposes tax equals $4 for selling an every extra ticket, what price would he charge for an adult ticket? For a child's ticket? How much the profit? Assume the law prohibiting him from charging different prices to different customers doesn't exist. (Hint: fixed cost doesn't include)arrow_forward
- COURSE: MICROECONOMICS - Bertrand's ModelAssume that a market is supplied by 2 companies, whose total costs are: CTi = 100Respective demand of each is: q1 = 120 - 2p1 + p2 and q2 = 120 - 2p2 + p1It is requested to:(a) calculate the firms' profit and reaction function.(b) plot the market equilibrium price and reaction function(d) calculate equilibrium quantity produced by each firm(e) determine profits that both firms will have at equilibrium.arrow_forward-- 49. Table 11-4 There are four homes along Belmont Circle, which surrounds a small plot of land. The land currently has no trees, and the 4 homeowners - Adams, Benitez, Chen, and Davis -- are considering the idea of contributing to a pool of money that will be used to plant up to 4 trees. The table represents their willingness to pay, that is, the maximum amount that each homeowner is willing to contribute toward each tree. Adams Chen $100 First tree Second tree Third tree Fourth tree A. 3 B. 2 C. 1 50 D. 4 20 10 Benitez $115 110 100 50 $120 110 80 40 Davis $90 Refer to Table 11-4. Suppose the cost to plant each tree is $90. How many trees should be planted to maximize the total surplus of the four homeowners? 50 30 Oarrow_forwardADVANCED ANALYSIS Assume the following values for the diagrams below: Q1 = 16 bags. Q2 = 11 bags. Q3 = 23 bags. The market equilibrium price is $53 per bag. The price at point a is $85 per bag. The price at point c is $5 per bag. The price at point d is $63 per bag. The price at point e is $38 per bag. The price at point f is $74 per bag. The price at point g is $39 per bag. Apply the formula for the area of a triangle (Area = ½ × Base × Height) to answer the following questions. a. What is the dollar value of the total surplus (= producer surplus + consumer surplus) when the allocatively efficient output level is produced? $ What is the dollar value of the consumer surplus at that output level? $ b.What is the dollar value of the deadweight loss when output level Q2 is produced? $ What is the total surplus when output level Q2 is produced? $ c.What is the dollar value of the deadweight loss when output level Q3 is produced? $ What is…arrow_forward
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