Principles of microeconomics | Economics homework help

PRINCIPLES OF MICROECONOMICS

FINAL ASSIGNMENT

 

 

1. The table below shows the total production a firm will be able to obtain if it employs varying amounts of resource X while the amounts of the other resources the firm employs remain constant. Compute the marginal product of each of the seven units of resource X and enter these figures in the table. Assume the product the firm produces sells in the market for $3.00 per unit. Compute the total revenue of the firm at each of the eight levels of output and the marginal revenue product of each of the seven units of resource X. Enter these figures in the table below.

Quantity of resource X employed

 

Total product

 

Marginal product of X

 

Total revenue

Marginal revenue product of X

0

0

     

1

24

_____

$_____

$_____

2

44

_____

_____

_____

3

60

_____

_____

_____

4

72

_____

_____

_____

5

80

_____

_____

_____

6

84

_____

_____

_____

7

86

_____

_____

_____

 

 

On the basis of your computations complete the firm’s demand schedule for resource X by indicating in the table below how many units of resource X the firm would employ at the given prices.

 

Price of X

Quantity of X demanded

$84

_____

72

_____

60

_____

48

_____

36

_____

24

_____

12

_____

6

_____

 

2. Use the following total-product schedule for a resource to answer the next three questions. Assume that the quantities of other resources the firm employs remain constant.

Units of resource

Total

product

1

12

2

21

3

27

4

32

5

36

 

(a) If the firm’s product sells for a constant $2 per unit, what is the marginal revenue product of the third unit of the resource?

(b) If the firm’s product sells for a constant $2 per unit and the price of this resource is $8, how many units of the resource will the firm employ?

(c) If the firm can sell 12 units of output at a price of $1.00 per unit and 21 units of output at a price of $0.80 per unit, what is the marginal revenue product of the second unit of the resource?

 

3. The table below summarizes the marginal product data for labor in producing personal computers. Assume the other quantities employed by the firm remain constant. Compute the MPL, TR, and MRP and answer the following questions.

L

TPL

MPL

Price

TR

MRP

0

0

 

$1000

_____

 

1

10

_____

1000

_____

_____

2

18

_____

900

_____

_____

3

24

_____

800

_____

_____

4

28

_____

700

_____

_____

5

30

_____

600

_____

_____

 

(a) What type of market is the one for personal computers?

Now look at the table below showing a different market situation for the demand for personal computers. Fill in the table and answer the following questions.

L

TPL

MPL

Price

TR

MRP

0

0

 

$1000

_____

 

1

10

_____

1000

_____

_____

2

18

_____

1000

_____

_____

3

24

_____

1000

_____

_____

4

28

_____

1000

_____

_____

5

30

_____

1000

_____

_____

 

(b) What type of market does the firm face for personal computers?

 

4. Complete the following table, where L is the units of labor, TPL is the total product of labor, MPL is the marginal product of labor, P is product price, TR is total revenue, and MRPL is the marginal revenue product of labor.

L

TPL

MPL

P

TR

MRPL

0

0

 

$2.00

$_____

 

1

10

_____

2.00

_____

$_____

2

19

_____

2.00

_____

_____

3

27

_____

2.00

_____

_____

4

34

_____

2.00

_____

_____

5

40

_____

2.00

_____

_____

6

45

_____

2.00

_____

_____

7

49

_____

2.00

_____

_____

8

52

_____

2.00

_____

_____

9

54

_____

2.00

_____

_____

10

55

_____

2.00

_____

_____

 

(a) In what type of market is the firm selling its product? How do you know?

(b) Why does the MRP schedule decrease as labor increases?

 

 

(c) Complete the following table.

Wage rate

Quantity of

workers employed

$16

_____

14

_____

12

_____

10

_____

8

_____

6

_____

 

5. What factors explain the high level of level of productivity in the United States?

 

6. Use the following data to answer the question.

Demand and Supply of Labor Data

 

Employment

Total output

Product price

 

Wage rate

50

708

$1.27

$6

51

760

1.26

7

52

810

1.25

8

53

858

1.24

9

 

 

How many units of labor will this firm hire in maximizing its profits?

 

7. What are the three different union strategies pursued to increase wages?

 

8. Use the extreme points from a production possibilities schedule below to draw two straight line production possibilities curves for two nations, A and B using the below graphs. Assume constant costs.

 

 

 

 

 

 

 

(a) What is the cost ratio for the two products?

(b) If each nation specializes according to comparative advantage, who should produce and trade each product? Why?

(c) What will be the range for the terms of trade? If the terms are set at 1 food = 2 clothing, show how the trading possibilities lines will change in the graph. Explain.

 

 

 

9. Explain how the “Buy American” theme hurts Americans.

 

 

 

10. What is the purpose of the World Trade Organization and its current activity?