Homework 3

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Question 19 pts

SCENARIO B: Suppose that due to favorable economic conditions, the price that this firm can sell its product for rises to $23.

For question 1, fill in Table B. Each box is worth ½ point for a total of 9 points.

TABLE B- The wage is still $150 and the price of output (Q) is now $23.

 L

 Q

 MPL

MRP

Marginal Profit

Total Profit

 0

 0

----

----

-------------

0

 1

 8

 8

$

$

$

 2

 20

 12

$

$

$

 3

 28

 8

$

$

$

 4

 35

 7

$

$

$

 5

 41

 6

$

$

$

 6

 45

 4

$

$

$

 

 

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Question 23 pts

Use Scenario B/Table B to answer the questions 2 – 4 below.

(3 points) The profit maximizing output (Q) is _______.

 

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Question 33 pts

(3 points) The profit maximizing level of labor (L) input is ______ workers.

 

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Question 43 pts

(3 points) The maximum profit for this firm is ______.

 

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DOWNLOAD AND PRINT  GRAPHING TEMPLATE  (available in theHomework 03 instructions). This template already shows the outcome from Scenario A. You will be adding results from scenario B, C, and D to these graphs.

Use this template for questions 5 - 7 (Scenario B), 15 - 17 (Scenario C) and 25 - 27 (Scenario D) . You will then upload the completed template for the file upload question #31.

 

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Question 52 pts

(2 points) Using Scenario B/Table B, go to Graph 1. Label the new profit maximizing Q and L combination on the production function as point B.

This work is to be done on your  Homework 03 Graphing template . You will upload this work, along with other work to be done on the template, to question #31 at the end of this HW. Enter the word "Finished" into the text-box below when ready to move on.

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Question 63 pts

(3 points) Using Scenario B/Table B, go to Graph 2 and draw this firm’s newMRP curve (remember that MRP = P* MPL, and since price changed, we know we have a new MRP curve!). Shade in the new area of profit. Also label the new profit maximizing point as letter B.

This work is to be done on your  Homework 03 Graphing template . You will upload this work, along with other work to be done on the template, to question #31 at the end of this HW. Enter the word "Finished" into the text-box below when ready to move on.

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Question 73 pts

(3 points) Using Scenario B/Table B, draw this firm’s Supply curve on Graph 3. You should construct a supply curve as we did in lecture with point A representing the original price and output combination from scenario A (original price was $20 combined with the profit maximizing Q of 28) and point B representing the price and output combination after the change in economic conditions in Scenario B (price rose to $23, and the profit maximizing Q you found in your answer for #2 above). Connect the two points and label your supply curve.

This work is to be done on your  Homework 03 Graphing template . You will upload this work, along with other work to be done on the template, to question #31 at the end of this HW. Enter the word "Finished" into the text-box below when ready to move on.

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Question 82 pts

(2 points) When comparing Scenario A to Scenario B, the firm now hires _______ workers.

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Question 92 pts

(2 points) When comparing Scenario A to Scenario B, the firm now produces _____ output.

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Question 102 pts

(2 points) When comparing Scenario A to Scenario B, the firm now earns _______ profit.

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Question 116 pts

SCENARIO C - We return to the original conditions (from scenario A) and now we let wages change. In particular, an increase in labor supply lowers the wage that the firm needs to pay to $132.

For question 11, fill in Table C. Each box is worth ½ point for a total of 6 points.

TABLE C- The wage has changed to $132 but the price of output (Q) is back at its original value of $20.

 L

 Q

MPL

 MRP

Marginal Profit

Total Profit

 0

 0

-----

-----

------------

0

 1

 8

 8

$160

$

$

 2

 20

 12

$240

$

$

 3

 28

 8

$160

$

$

 4

 35

 7

$140

$

$

 5

 41

 6

$120

$

$

 6

 45

 4

$80

$

$

 

 

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Question 123 pts

Use Scenario C/Table C to answer the questions 12 – 14 below.

(3 points) The profit maximizing output is ______.

 

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Question 133 pts

(3 points) The profit maximizing level of labor input is ______ workers.

 

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Question 143 pts

(3 points) The maximum profit for this firm is __________.

 

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Question 152 pts

(2 points) Using Scenario C/Table C, go to Graph 1. Label the profit maximizing Q and L combination as point C.

This work is to be done on your  Homework 03 Graphing template . You will upload this work, along with other work to be done on the template, to question #31 at the end of this HW. Enter the word "Finished" into the text-box below when ready to move on.

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Question 163 pts

(3 points) Using Scenario C/Table C, go to Graph 4 and draw in this firm’s new wage line. The MRP curve is unchanged since MRP = P* MPL, and neither P nor MPL has changed. Shade in the new area for profit. Also label the profit maximizing point as letter C.

This work is to be done on your  Homework 03 Graphing template . You will upload this work, along with other work to be done on the template, to question #31 at the end of this HW. Enter the word "Finished" into the text-box below when ready to move on.

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Question 173 pts

(3 points) Using Scenario C/Table C, go to graph 3 and add this firm’s new supply curve. Label as point C the price and output combination occurring after the change in economic conditions in Scenario C (P= $20, and the profit maximizing Q you found in your answer for #12 above). You only have one point on this supply curve, but you can sketch it as an upward sloping supply curve that is parallel to the supply curve you drew earlier.

This work is to be done on your  Homework 03 Graphing template . You will upload this work, along with other work to be done on the template, to question #31 at the end of this HW. Enter the word "Finished" into the text-box below when ready to move on.

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Question 182 pts

(2 points) When comparing Scenario A to Scenario C, the firm now hires _______

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Question 192 pts

(2 points) When comparing Scenario A to Scenario C, the firm now produces _____

more

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Question 202 pts

(2 points) When comparing Scenario A to Scenario C, the firm now earns _______ profit.

more

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Question 2115 pts

SCENARIO D - In this final scenario, we again return to our original conditions (from scenario A) and consider a positive productivity shock, just like we did in the lectures. In particular, let the MPL of each worker rise by three, due to an increase in total factor productivity (denoted A in the lecture), relative to the initial conditions.

For question 21, fill in Table D. Each box is worth ½ point for a total of 15 points.

TABLE D- The wage is $150 and the price of output (Q) is $20.

Calculate the missing values in the following table below. Missing values are denoted by a number inside a bracket [X]. Some numbers have been filled in for you. Place your answers in the corresponding numbered fields below the table. Hint: All answers that you fill in will be integers (no decimals). Be sure to just type the numbers and do not type in dollar signs. If you enter negative numbers, be sure to include a minus sign (-) to the left of the number.

Another Hint: It may be best if you download the table first  and fill it in by hand and then type in your answers.

1 -    2 -    3 -    4 -    5 -    6 -    7 -    8 -    9 -    10 -    11 -    12 -    13 -    14 -    15 -    16 -    17 -    18 -    19 -    20 -    21 -    22 -    23 -    24 -    25 -    26 -    27 -    28 -    29 -    30 - 

 

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Question 223 pts

Use Scenario D/Table D to answer the questions 22 – 24 below.

(3 points) The profit maximizing output is ______.

 

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Question 233 pts

(3 points) The profit maximizing level of labor input is _____ workers.

 

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Question 243 pts

(3 points) The maximum profit for this firm is ______.

 

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Question 253 pts

(3 points) Using Scenario D/Table D, go to Graph 1. Draw your new production function (remember technology [total factor productivity] increased, shifting the production function!) Label the new profit maximizing Q and L combination as point D.

This work is to be done on your  Homework 03 Graphing template . You will upload this work, along with other work to be done on the template, to question #31 at the end of this HW. Enter the word "Finished" into the text-box below when ready to move on.

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Question 263 pts

(3 points) Using Scenario D/Table D, go to Graph 5 and draw this firm’s new MRP curve (remember that MRP = P* MPL, and since MPL has changed, we know we have a new MRP curve!). Shade in the new area of profit. Also label the new profit maximizing point as letter D.

This work is to be done on your  Homework 03 Graphing template . You will upload this work, along with other work to be done on the template, to question #31 at the end of this HW. Enter the word "Finished" into the text-box below when ready to move on.

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Question 273 pts

(3 points) Using Scenario D/Table D, go to Graph 3 and add this firm’s new supply curve. Label the price and output combination after the change in economic conditions in Scenario D (P= $20, and the profit maximizing Q you found in your answer for #22 above). You only have one point on this supply curve, but you can sketch it as an upward sloping supply curve that is parallel to the supply curves you drew earlier.

This work is to be done on your  Homework 03 Graphing template . You will upload this work, along with other work to be done on the template, to question #31 at the end of this HW. Enter the word "Finished" into the text-box below when ready to move on.

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Question 282 pts

(2 points) When comparing Scenario A to Scenario D, the firm now hires _______ workers.

fewer

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Question 292 pts

(2 points) When comparing Scenario A to Scenario D, the firm now produces _____ output.

less

more

 

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Question 302 pts

(2 points) When comparing Scenario A to Scenario D, the firm now earns _______ profit.

more

less

 

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