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ECN 104 (136)
Quiz

7 Pages
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School
Ryerson University
Department
Economics
Course
ECN 104
Professor
Tom Barbiero
Semester
Summer

Description
Answers to Assignment Ten 1. The table below shows the total production a firm will be able to obtain if it employs varying amounts of factor X while the amounts of the other factors the firm employs remain constant. Compute the marginal product of each of the seven units of factor X and enter these figures in the table. Assume the product the firm produces sells in the market for \$3.00 per unit. Compute the total revenue of the firm at each of the eight levels of output and the marginal revenue product of each of the seven units of factor X. Enter these figures in the table below. Quantity of Marginal factor X Total Marginal Total revenue employed product product of X revenue product of X 0 0 \$_____ 1 24 _____ _____ \$_____ 2 44 _____ _____ _____ 3 60 _____ _____ _____ 4 72 _____ _____ _____ 5 80 _____ _____ _____ 6 84 _____ _____ _____ 7 86 _____ _____ _____ On the basis of your computations complete the firm’s demand schedule for factor X by indicating in the table below how many units of factor X the firm would employ at the given prices. Quantity of Price of X X demanded \$84 _____ 72 _____ 60 _____ 48 _____ 36 _____ 24 _____ 12 _____ 6 _____ Quantity of Marginal factor X Total Marginal Total revenue employed product product of X revenue product of X 0 0 \$0 1 24 24 72 \$72 2 44 20 132 60 3 60 16 180 48 4 72 12 216 36 5 80 8 240 24 6 84 4 252 12 7 86 2 258 6 Quantity of Price of X X demanded \$84 0 72 1 60 2 48 3 36 4 24 5 12 6 6 7 2. Use the following total-product schedule for a factor to answer the next three questions. Assume that the quantities of other factors the firm employs remain constant. Units of Total factor product 1 12 2 21 3 27 4 32 5 36 (a) If the firm’s product sells for a constant \$2 per unit, what is the marginal revenue product of the third unit of the factor? (b) If the firm’s product sells for a constant \$2 per unit and the price of this factor is \$8, how many units of the factor will the firm employ? (c) If the firm can sell 12 units of output at a price of \$1.00 per unit and 21 units of output at a price of \$0.80 per unit, what is the marginal revenue product of the second unit of the factor? (a) \$12. The third worker increases TP by 6 units. 6 x \$2 = \$12. (b) 5 units. The marginal product of the fifth factor is 4 units of output (4 x \$2 = \$8). Thus, MRP = \$8 and MFC = \$8 when the fifth factor is employed. (c) \$4.80. The total revenue from 1 unit of factor is \$12.00 (12 x \$1.00). The total revenue with 2 units of factor is \$16.80 (21 x \$0.80). The difference is the MRP of the second factor or \$4.80. 3. Complete the following table, where L is the units of lLbour, TP is the total product of labour, ML is the marginal product of labour, P is product price, TR is total revenue, and MLP is the marginal revenue product of labour. L TPL MP L P TR MRP L 0 0 \$2.00 1 10 _____ 2.00 \$_____ \$_____ 2 19 _____ 2.00 _____ _____ 3 27 _____ 2.00 _____ _____ 4 34 _____ 2.00 _____ _____ 5 40 _____ 2.00 _____ _____ 6 45 _____ 2.00 _____ _____ 7 49 _____ 2.00 _____ _____ 8 52 _____ 2.00 _____ _____ 9 54 _____ 2.00 _____ _____ 10 55 _____ 2.00 _____ _____ (a) In what type of market is the firm selling its product? How do you know? (b) Why does the MRP schedule decrease as labour increases? (c) Complete the following table: Wage Quantity of rate workers employed \$16 _____ 14 _____ 12 _____ 10 _____ 8 _____ 6 _____ L TP L MP L P TR MRP L 0 0 \$2.00 –– 1 10 10 2.00 \$20 \$20 2 19 9 2.00 38 18 3 27 8 2.00 54 16 4 34 7 2.00 68 14 5 40 6 2.00 80 12 6 45 5 2.00 90 10 7 49
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