Question

In: Economics

Please answer it with explanation A      Table 1 Output (units per day) 0 10 20 30 Total...

Please answer it with explanation

A      Table 1

Output (units per day)

0

10

20

30

Total cost (dollars per day)

$40

$54

$62

$80

For the output levels in Table 1, the minimum of the average variable cost curve occurs at a production rate of       
         A)    Zero units per day.        
         B)    10 units per day.
         C)    20 units per day.
         D)    30 units per day.

B      Refer to Table 2 below Table 2

Units of Labor

Units of Output

Marginal Product

0

0

1

30

2

66

3

30

4

116

How many units of output can be produced when three units of labor are employed in Table 2?

                A) 30  B) 31  C) 66 D) 96

C    When technology improves, the firm's marginal cost curve shifts        
         A)    Upward, and supply increases.        
         B)    Downward, and supply increases.
         C)    Upward, and supply decreases.
         D)    Downward, and supply decreases

D      A profit-maximizing monopolist produces the rate of output where     
         A)    MR = MC and determines price based on the demand curve.       
         B)    Price = MC.
         C)    MR = MC and can set prices at any amount it chooses.
         D)    MR = MC and determines price based on ATC

E    For the perfectly competitive firm, the marginal revenue is always      
         A)    Increasing.  
         B)    Constant.
         C)    Equal to average total cost.
         D)    Decreasing.


Solutions

Expert Solution

A.Ans: C) 20 units per day.

Explanation:

Total cost = Fixed cost + Variable cost

Average variable cost = Total cost / Quantity

Output
( Units per day
Total Cost Fixed cost Variable cost Average Variable cost
0 $40 $40 $0 --
10 54 40 14 $1.4
20 62 40 22 1.1
30 80 40 40 1.33

B.Ans: D) 96

Explanation:

Units of Labor Units of Output Marginal Product
0 0 --
1 30 30
2 66 36
3 96 30
4 116 20

Marginal Product of labor = Change in total product / Change in number of labor

C.Ans: B) Downward, and supply increases.

Explanation:

When technology improves, then the firm's marginal cost will decrease . It leads more production . So When technology improves, the firm's marginal cost curve shifts downward, and supply increases.

D.Ans: A ) MR = MC and determines price based on the demand curve.  

E.Ans: B) Constant.

Expalnation:

Under perfect competition , the industry is the price maker whereas the firm is the price taker. It means there is an unique price in the market . Firms are not able to change the market price. They can sell or produce as much as they can at the prevailing market price.

So under perfect competition , Price = Marginal Revenue = Average Revenue ( P = MR = AR)


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