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4 ) Complete the following table.
i ) Find out the total product (TP), average product (AP), marginal product (MP) and draw a graph of TP, AP, MP and also explain the stage of production.
ii ) if the fixed price of land is 1000 and firm pay 750 to each worker then calculate, Fixed cost, variable Cost, Marginal Cost, Average variable Cost (AVC), Average Fixed Cost(AFC), and Average total cost(ATC).
Consider a market in which Bert from problem 4 is the buyer and Ernie from problem 5 is the seller. a. Use Ernie’s supply schedule and Bert’s demand schedule to find the quantity supplied and quantity demanded at prices of $2, $4, and $6. Which of these prices brings supply and demand into equilibrium? b. What are consumer surplus, producer surplus, and total surplus in this equilibrium? c. If Ernie produced and Bert consumed one fewer bottle of water, what would happen to total surplus? d. If Ernie produced and Bert consumed one additional bottle of water, what would happen to total surplus?
Suppose that the price of commodity Y is $1 per unit while the price of commodity X is $2 per unit and suppose that an individual’s money income is $16 per time period and is all spent on X and Y. (a) Draw the budget constraint line for this consumer and (b) explain the reason for the shape and the properties of the budget constraint line in part (a).
3) Draw indifferences curves to represent each of the following type of preferences.
i) A customer is always pleased to change 5 sweet candy for 1 chochlate bar.
ii) A customer always desires 2 glasses to wear with 1 frame.
Define the following
1 ) Perfect Competition
2 ) Monopoly
3 ) Monopolistic Competition
4 ) Oil GoPoLY
The following tables show a small firm’s long-run average cost of manufacturing a good at two different plants:
Plant1:
Quantity: 1 2 3 4 5 6 7 8 9
T.C.= 50 106 164 224 287 355 430 520 618
A.C.= ? ? ? ? ? ? ? ? ?
M.C.= ? ? ? ? ? ? ? ? ?
Plant2:
Quantity: 1 2 3 4 5 6 7 8 9
T.C= 20 52 90 130 175 227 285 345 407
A.C = ? ? ? ? ? ? ? ? ?
M.C= ? ? ? ? ? ? ? ? ?
T.C=Total Cost
A.C=Average Cost
M.C=Marginal Cost
c) A new manager is assigned to the production department. He thinks that the firm can profitably move all production to Plant 2 since the average cost of production is lower in Plant 2 than in Plant 1. If the firm only uses Plant 2, how much should it produce in order to maximize profits? Find the firm’s profit. Assume zero fixed cost.
Consider a consumer who buys two good x and y with utility function u (x,y)=2 under root x+y. The consumer's income is 20 and price of y= 4. Compute the optimal consumption bundle when the price of x =1 and if the price of x rises to 4 what is the new optimal bundle
The following tables show a small firm’s long-run average cost of manufacturing a good at two different plants:
Plant 1:
Quantity: 1 2 3 4 5 6 7 8 9
T.C.: 50 106 164 224 287 355 430 520 618
A.C. ? ? ? ? ? ? ? ? ?
M.C. ? ? ? ? ? ? ? ? ?
Plant 2:
Quantity: 1 2 3 4 5 6 7 8 9
T.C.: 20 52 90 130 175 227 285 345 407
A.C. ? ? ? ? ? ? ? ? ?
M.C. ? ? ? ? ? ? ? ? ?
T.C.=Total Cost
A.C.=Average Cost
M.C.=Marginal Cost
a) Complete the third and fourth columns of each table.
b) Suppose the price of the good is $60. How much should the firm produce in each plant in order to maximize the firm’s profit? Find the firm’s profit.
A. Choose a product with which you are familiar (i.e. Starbuck’s Frappuccinos) that will be
affected by the dynamics of the market economy.
B. Make up two different headlines for two graphs relating to factors causing a shift in demand,
then show how each will impact the product related to either surpluses or shortages and
ultimately a change in the equilibrium price. One must be an increase in demand, the other a
decrease in demand. You may only use each cause of a shift once!!! such as population.
C. Do the same for two factors causing a shift in supply. You must draw a separate graph for
each factor. You may only use each cause of a shift once!!! such as technology.
D. Type a paragraph about each of your graphs (four total) to predict whether the product will
demonstrate an increase or decrease in demand or supply and what will have to happen
economically (i.e., shortage, surplus, price increase, price decrease).
Sanjana loves to read books(B) and likes to watch movies (M) as well. She derives double the satisfaction from reading a book than watching a movie. Her utility function is as follows
U(B, M) = 2B + M
Where B and M are the number of books and movies respectively.
a. Explain the shape of the indifference curve using diagrams. [3 MARKS, Word limit: 200] b. The income available with her is INR60. And price of movie ticket is INR 10 and that of a book is INR 15. Will she spend her entire budget and why? What will be her consumption, explain why?
