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Q = -L^3 + 5L^2 + 10L
Derrive MPL and APL
At what level of labor employment does the total production begin to decline ?
The following data are for a pop-up sandwich shop operating in perfectly competitive goods and labour markets. All figures are hourly and the market price for a sandwich is £1.99.
Number of workers
Wage Rate (£)
Total Physical Product of Labour (output in sandwiches)
1
9.99
5
2
9.99
15
3
9.99
23
4
9.99
29
5
9.99
33
6
9.99
35
A cake retailer increases the price of its cakes from £2.00 to £2.60 per cake and the quantity demanded decreases from 60 cakes per day to 45 cakes per day.
The price elasticity of demand for the retailer’s cake is
Draw a diagram showing the effects of a decrease in the wage rate of bricklayers on the equilibrium market price and output in the annual market for new houses in France.
Draw a diagram showing the effects of an increase in the price of bus journeys on the equilibrium market price and output in the weekly market for e-scooters in the UK.
Suppose the market for widgets can be described by the following equations: Demand: P = 10 - Q Supply: P = Q - 4 where P is the price in dollars per unit and Q is the quantity in thousands of units. Then: a. What is the equilibrium price and quantity? [2] b. Suppose the government imposes a tax of $1 per unit to reduce widget consumption and raise government revenues. What will the new equilibrium quantity be? What price will the buyer pay? What amount per unit will the seller receive? [5] c. Suppose the government has a change of heart about the importance of widgets to the happiness of the American public. The tax is removed and a subsidy of $1 per unit granted to widget producers. What will the equilibrium quantity be? What price will the buyer pay? What amount per unit (including the subsidy) will the seller receive? What will be the total cost to the government? [5
Suppose the government wants to limit imports of a certain good. Is it preferable to use an
import quota or a tariff? Motivate why you recommend one over the other. [8]
The following data are for a kebab shop operating in perfectly competitive goods and labour markets. All figures are hourly and the market price for a kebab is
£2.10.
Number of workers
1 2 3 4 5 6
Wage Rate (£)
8.50 8.50 8.50 8.50 8.50 8.50
Total Physical Product of Labour (output in kebabs) 2
9
14
18
21
22
Suppose the market for widgets can be described by the following equations: Demand: P = 10 - Q Supply: P = Q - 4 where P is the price in dollars per unit and Q is the quantity in thousands of units. Then: a. What is the equilibrium price and quantity? [2] b. Suppose the government imposes a tax of $1 per unit to reduce widget consumption and raise government revenues. What will the new equilibrium quantity be? What price will the buyer pay? What amount per unit will the seller receive? [5] c. Suppose the government has a change of heart about the importance of widgets to the happiness of the American public. The tax is removed and a subsidy of $1 per unit granted to widget producers. What will the equilibrium quantity be? What price will the buyer pay? What amount per unit (including the subsidy) will the seller receive? What will be the total cost to the government?
Suppose the government wants to limit imports of a certain good. Is it preferable to use an import quota or a tariff? Motivate why you recommend one over the other
