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(TCO A) There is an increase in the cost of materials for producing bicycles.
(4 pts.) What happens to bicycle supply?
(6 pts.) What happens to bicycle demand?(TCO A) Digital cameras and memory cards are complements in consumption. The price of digital cameras falls.
(4 pts.) What happens to the demand for memory cards?
(6 pts.) What happens to the demand for digital cameras?SA 3. (TCO A) The number of wheat producers decreases.
(4 pts.) What happens to the supply of wheat?
(6 pts.) What happens to the demand for wheat?(TCO A) A market is in equilibrium with equilibrium quantity Q* and equilibrium price P*.
(2 pts.) What happens to P* if there is an increase in supply?
(4 pts.) What happens to Q* if there is a decrease in supply and a decrease in demand?
(4 pts.) What happens to P* if there is an increase in demand followed by a decrease in supply followed by another increase in demand?
(TCO B) The following table shows part of the demand for tickets to a local sporting event:
Price(P)...Quantity(Q)
15...........40
10..........100
6............150
3............250
(2 pts.) Is demand elastic in the $3 - $6 price range?
(4 pts.) Ed = 0.8 in the $6 - $10 price range. In this range of demand, by what percentage would quantity demanded change if price changes by 5 percent?
(4 pts.) Price falls from $15 to $10. Does total revenue (TR) increase, decrease, or remain the
Use a hypothetical example to illustrate whether you agree or disagree with the following statement: "Unemployment will go up more if the demand for labor is elastic because the demand for labor will decrease more when you have elastic demand than if demand were inelastic." Explain why, using hypothetical numbers to illustrate your case.
(TCO C) You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below.
No. of workers Total Labor Cost Output Total Revenue
1 $150 100 $170
2 300 108 550
3 450 114 1150
4 600 119 1470
5 750 123 1600
6 900 125 1700
7 1050 126 1750
(2 points) What is the marginal product of the second worker?
(2 points) What is the marginal revenue product of the fourth worker?
(2 points) What is the marginal cost of the fifth worker?
(4 points) Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer.
(TCO C) You have been hired to manage a small manufacturing facility which has cost and production data given in the table below.
No. of workers Total Labor Cost Output Total Revenue
1 $150 100 $170
2 300 108 550
3 450 114 1150
4 600 119 1470
5 750 123 1600
6 900 125 1700
7 1050 126 1750
What is the marginal product of the second worker?
TCO C) Answer the next question on the basis of the following cost data for a purely competitive seller:
Total Product TFC TVC
0 $150 $0
1 150 70
2 150 120
3 150 150
4 150 220
5 150 300
6 150 390
Refer to the above data. If the product price is $95 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.
TP TFC TVC MC
0 $150 $0
1 150 70 70
2 150 120 50
3 150 150 30
4 150 220 70
5 150 300 80
6 150 390 90
When P = $95, then MR = $95, and we want to produce as long as the rising MC is less than $95.
So we would produce 6 units, Total Revenue would be 6 x $95 = $570.
Total Costs = $150 + $390 = $540.
So there would be a profit of TR - TC = $570 - $540 = $30.
(TCO C) Answer the next question on the basis of the following cost data for a purely competitive seller:
Total Product TFC TVC
0 $50 $0
1 50 70
2 50 120
3 50 150
4 50 220
5 50 300
6 50 390
Refer to the above data. If the product price is $105, at its optimal output will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.
Instructor Explanation :
TP TFC TVC MC
0 $50 $0
1 50 70 70
2 50 120 50
3 50 150 30
4 50 220 70
5 50 300 80
6 50 390 90
(TCO C) A firm has Total Costs (TC) of $12,000 over the next three months (TOTAL for the 3 months - not per month), of which $6,000 are fixed costs (TFC) for rent on its lease that cannot be broken. If it stays in business over those months, then the firm will collect only $4,000 in revenues (TR). So, considering only this information, should they stay in business for those three months or should they close down right now? Provide your reasoning.
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