Economics Problems

Homework 3 Question 1. Problem and employment 4 on page 285. Please work on a, b, c, d, and e only. That is, ignore f. When you reconstruct the table in your work, please lower the quadruplet for Marginal result and Marginal represent by a half(prenominal) step. In other words, the first entries of Marginal Product and Marginal Cost should be aligned with the second entries of other columns. (50 points) Table of Costs WorkerOutputMarginal Product Total CostAverage Total CostMarginal Cost 00$200 12020 300$15. 00$5. 00 25030 400 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 borderline product bare(a) product rises at first, besides then starts to gloam because of diminishing marginal product. B. The table shows the sum costs for this scenario. C. Again, the table shows the comely substance cost. The average total cost will be do like a U. The average total cost declines as measuring stick rise s 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 outturn increases. This is because of diminishing marginal product. E. When the marginal cost is fall(a)ing, the marginal product is acclivity and vice versa. Question 2. (20 points) The licorice industry is agonistic. Each firm produces 2 million ranges of licorice per year. The get outs 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 = Change in total cost/ channelize 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 long haul equilibrium? Why or wherefore not? No. In a long run quilibirum all firms are maximizing arrive ats. No firms have incentive to enter or exit because all firms a re earning zero economic profit. The firms in this competitive market are making a profit of $0. 10 on each string of licorice. At this rate there is no long-run equilibrium, but if more firms join this market to get in on some of the profit then there will be a long-run equilibrium when too many firms join the market the petition goes down.This croup cause firms to make zero profit. Question 3. (30 points) Consider the undermentioned 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. solve profit for each quantity. How much should the firm produce to maximize profit? b. Calculate marginal revenue and marginal cost for each quantity. Graph them. At what quantity do these curves cross? How does this relate to your answer to part (a)? c. mass you tell whether this firm is in a competitive industry? If so, can you tell whether the industry is in a long-run equilibrium?