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Exercise 1: Suppose that as a result of an improvement in technology the producer's supply change from: (S1) Qs=-40+20P to (S2) Qs=-10+20P 1. From S1 to S2, Supply increase or decrease? Why? 2. Derive this producer's old and new supply schedule? 3. On one axes, draw this producer's supply curves before and after the improvement in technology? 4. How much of commodity X does this producer supply at the price of 4$ before and after the improvement in technology? Exercise 2: Tablele 2.1 gives the supply schedule of the three producer of commodity X in the market. Draw, on one set of axes, the three producer's supply curves and derice geometrically the market supply curve for commodity X Quantity Supplied (Kg, Per time period) Producer 1 Producer 2 Producer 3 Market Supply 0.00 0.00 0.00 10.00 10.00 1.00 0.00 0.00 25.00 25.00 2.00 0.00 20.00 35.00 55.00 3.00 10.00 30.00 42.00 82.00 4.00 16.00 36.00 46.00 98.00 5.00 20.00 40.00 50.00 110.00 6.00 22.00 42.00 53.00 117.00 Exercise 3: commodity X, each with a demand function given by 1. Find the market demand function and the market supply function for commodity X? 2. Find the market demand schedule and the market supply schedule of commodity X and from them find the equilibrium price and the equilibrium quantity? 3. Plot, on one set of axes, the market demand curve and the market supply curve for commodity X and show the equilibrium point? 4. Obtain the equilibrium price and the equilibrium quantity mathemati Exercise 4: Suppose that from the condition of equilibrium in exercise 3, there is P ($/Kg) There are 10,000 identical individual in the market for (D1) Qd=12-2P, and 1,000 identical producers of commodity X, each with a function given by (S1) Qs=20P.
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Page 1: Microeconomics Homew Ork

Exercise 1:Suppose that as a result of an improvement in technologythe producer's supply change from: (S1) Qs=-40+20P to (S2) Qs=-10+20P1. From S1 to S2, Supply increase or decrease? Why?2. Derive this producer's old and new supply schedule?3. On one axes, draw this producer's supply curves beforeand after the improvement in technology?4. How much of commodity X does this producer supply at the price of 4$ before and after the improvement in technology?

Exercise 2:Tablele 2.1 gives the supply schedule of the three producer of commodity X in the market. Draw, on one set of axes, the three producer's supply curves and derice geometricallythe market supply curve for commodity X

Quantity Supplied (Kg, Per time period)Producer 1 Producer 2 Producer 3 Market Supply

0.00 0.00 0.00 10.00 10.001.00 0.00 0.00 25.00 25.002.00 0.00 20.00 35.00 55.003.00 10.00 30.00 42.00 82.004.00 16.00 36.00 46.00 98.005.00 20.00 40.00 50.00 110.006.00 22.00 42.00 53.00 117.00

Exercise 3:

commodity X, each with a demand function given by

1. Find the market demand function and the market supplyfunction for commodity X?2. Find the market demand schedule and the market supply schedule of commodity X and from them find the equilibriumprice and the equilibrium quantity?3. Plot, on one set of axes, the market demand curve and themarket supply curve for commodity X and show the equilibriumpoint?4. Obtain the equilibrium price and the equilibrium quantity mathematically?

Exercise 4:Suppose that from the condition of equilibrium in exercise 3, there is an

P ($/Kg)

There are 10,000 identical individual in the market for

(D1) Qd=12-2P, and 1,000 identical producers of commodity X,each with a function given by (S1) Qs=20P.

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increase in consumer's income (ceteris paribus) so that a new market demand

1. Derive the new market demand schedule2. Show the new market demand curve on the graph of exercise 3 (3)3.State the new equilibrium price and the new equilibrium quantity forcommodity X.4. Obtain the equilibrium price and the equilibrium quantity mathematically?

Exercise 5:Commodity X have:(D1) Q=100-2P(S1) Q=3P-501. Find the equilibrium price Pe1and the equilibrium quantity Qe1?

Pe1=Qe1=

2 Demand increase 50% become (D2), so demand D2 have:

Find the equilibrium price Pe2 and the equilibrium quantity Qe2 between D2 and S1?Pe2=Qe2=

3 Supply increase 40% become (S2), so supply S2 have:(S2) Q=Find the equilibrium price Pe3 and the equilibrium quantity Qe3 between D2 and S2?

Pe3=Qe3=

4. Derive the demand schedule and supply scheduleQ Pd1 Ps1 Pd2 Ps2

0.00 50.00 16.67 50.00 16.675.00 47.50 18.33 48.33 17.86

………….. ………….. ………….. ………….. …………..…………. …………. …………. …………. ………….

75.00 12.50 41.67 25.00 34.5280.00 10.00 43.33 23.33 35.71

5. Plot, on one set of axes, the demand curve (D1, D2) and thesupply curve (S1, S2) for commodity X and show the equilibriumpoint (E1, E2, and E3)?

Exercise 6:Commodity X have:(D1) P=100-(1/4)Q(S1) P=(3/4)Q-501. Find the equilibrium price, Pe1and the equilibrium quantity, Qe1?

curve is given by (D2) Qd=140,000-20,000P

(D2) Q=

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2 Demand increase 50% become (D2), so demand D2 have:(D2) Q=???Find the equilibrium price Pe2 and the equilibrium quantity Qe2 between D2 and S1?3 Supply increase 40% become (S2), so supply S2 have:(S2) Q=???Find the equilibrium price Pe3 and the equilibrium quantity Qe3 between D2 and S2?4. Derive the demand schedule and supply schedule5. Plot, on one set of axes, the demand curve (D1, D2) and thesupply curve (S1, S2) for commodity X and show the equilibriumpoint (E1, E2, and E3)?

Exercise 7:

commodity X, each with a demand function given by

1. Find the market demand function and the market supplyfunction for commodity X?2. Find the market demand schedule and the market supply schedule of commodity X and from them find the equilibriumprice and the equilibrium quantity?3. Plot, on one set of axes, the market demand curve and themarket supply curve for commodity X and show the equilibriumpoint?4. Obtain the equilibrium price and the equilibrium quantity mathematically?

There are 10,000 identical individual in the market for

(D1) P=120-Q, and 1,000 identical producers of commodity X,each with a function given by (S1) P=(1/2)Q

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Exercise 1:The following table presents hypothetical data for the market demandfor a good. Complete the table:

Qd P AR TR MR Ed Type of Demand1.00 50.002.00 40.003.00 30.004.00 20.005.00 13.006.00 8.00

Exercise 2:Given: The demand equation is P=40-2Qa. What is the equation for MR?b. At what output is MR=0?c. At what output is TR maximum?d. Determine the price elasticity of demand at the output where TR is maximumComplete the table:

Q P TR MR Ed Type of Demand0.000.501.00

………… ………… ………… ………… ………… …………………… ………… ………… ………… ………… …………

20.00Draw, on one set of axes the P, TR, MRExercise 3:Suppose that the demand equation for a good is Q=20-2PComplete the table:

Q P TR MR Ed Type of Demand0.002.004.00

………… ………… ………… ………… ………… …………………… ………… ………… ………… ………… …………

20.00

Exercise 4:

calculate the price elasticity of demand at a price of $4 and at a price $3

Exercise 5:

Suppose that the demand equation for a good is Q=16+9P-2P2,

If the demand equation for an item is P=1000+3Q-4Q2

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a. Determine price elasticity of demand at Q=10b. Determine the equation for TR and MR

Exercise 6:

where Qa=Units of product A demanded by consumers each day and Pb=Sellingprice of product B.a. Determine the cross-elasticity coefficient for the two products when the priceof product B=$10b. Are products A and B complements, subtitutes, or independent, and how "strong"is the relationship?

Exercise 7:The Fairfax Apparel Company manufactures sports, shirts for men; during 1987Fairfax sold an average of 23,000 sports shirts for $13 per shirt. In early January1988, Fairfax's major competitor, Lafayyete Manufacturing Co., cut the price ofits sports shirts from $15 to $12. The orders Fairfax received for its own sports shirts dropped sharly, from 23,000 per month to 13,000 per month for Februaryand March 1988.a. Calculate the cross elasticity of demand between Fairfax's sports shirts andLafayette's sports shirts during February and March. Are the two companies' sports shirts good or poor substitutes?b. Suppose that the coeffient of the price elasticity of demand for Fairfax'ssports shirts is -2.0. Assuming that Lafayette keeps its price at $12, by howmuch must Fairfax cut its price to build its sales of shirts back up to 23,000per month? (Use the arc formula for price elasticity)

Exercise 8:Find the price elasticity of demand (Ed) for the curvilinear demand function

Exercise 9:Suppose that two prices and their corresponding quantities (Table 9) are observed in the market for commodity X. Find the price elasticity of demandfor commodity X between point A and point B (Moving from A to B, from B to A, and Midway between A and B)

Point Px QxA 6.10 32,180.00B 5.70 41,230.00

Exercise 10:

Given: The relationship between product A and product B is Qa=80Pb-0.5Pb2,

of the form Q=aP-b

Find the cross elasticity of demand between hot dogs (X) and hamburgers (Y) (Exy)

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Commodity Before AfterP Q P Q

Hamburgers (Y) 3.00 30.00 2.00 40.00Hot dogs (X) 1.00 15.00 1.00 10.00Mustard (Z) 1.50 10.00 2.00 9.00Hot dogs (X) 1.00 15.00 1.00 12.00

Exercise 11:From the supply schedule in Table 11, find arc elasticity for a movementa. From poit A to point C b. From poit C to point A c. Midway between A and Cd. At point B

Point A B C D EPx 6.00 5.00 4.00 3.00 2.00Qx 6,000.00 5,500.00 4,500.00 3,000.00 0.00

Exercise 12:With reference to Fig 12, consider the following two farm-aid programs forwheat farmers.I. The government sets the price of wheat at P2 and purchases the resultingsurplus of wheat at P2.II. The government allows wheat to be sold at the equilibrium price of P1and grants each farmer a cash subsidy of P2-P1 on each unit sold. Whichof the two programs is more expensive to the government?

Exercise 13:We have:

%∆Q=%∆TR=

Find:%∆P=

and between hot dogs (X) and mustard (Z) (Exz) for the data in Table 10

P1

P2

Pw

Qw

Dw

A

E

Sw

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Ed=

Exercise 14:We have:

%∆P=%∆TR=

Find:%∆Q=

Ed=

Exercise 15:We have:

%∆Q=%∆P=

Find:%∆TR=

Ed=

Exercise 15:We have:

%∆Q=Ed=

Find:%∆P=

%∆TR=

Exercise 16:At the equilibrium point we have:

Pe= 100.00Qe= 200.00Es= 4.00Ed= -2.00

Find:Demand function and Supply function:

Q=a+bP and P=c+dQ

Exercise 17:

A

CB

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Compare type of demand at poits A, B, and C

Exercise 18:

Compare type of demand at poits A, B, and C

Exercise 19:

Compare type of demand at poits A, B, and C

A

C

A

CB

A

CB

A

C

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Exercise 1:Demand and Supply for commodity X:(D1) Q=500-2P(S1) Q=3P-2001. Find the equilibrium price and quantity (Pe1, Qe1) for commodity X,elasticity of demand and supply at equilibrium point (Ed1, Es1)?2. Demand for commodity X increase 50% in order to become D2,(D2) Q=???Find the equilibrium price and quantity (Pe2, Qe2) between D2 and S13. Supply for commodity X increase 40% in order to become S2,(S2) Q=???Find the equilibrium price and quantity (Pe3, Qe3) between D2 and S24. From D2 and S2, the government set the price control (Pct)4.1 Price control=120%*Pe3Pct=???What is type of price?Result of that price:Qd=???Qs=???Excess demand or excess supply?Government spending (B) ???B=???4.2 Price control=80%*Pe3Pct=???What is type of price?Result of that price?Qd=???Qs=???Excess demand or excess supply?Government spending ???B=???4.3 Tax (T)=10%Pe3T=???4.3.1 If taxe on the demand side (buyers)* Demand function and supply function after tax* Equilibrium price and quantity after tax (Pe4, Qe4)* Incidence of tax between buyers and selllers* Total government tax revenue is?4.3.2 If taxe on the supply side (sellers)* Demand function and supply function after tax* Equilibrium price and quantity after tax (Pe5, Qe5)* Incidence of tax between buyers and selllers* Total government tax revenue is?

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Exercise 2:Demand and Supply for commodity X:(D1) P=500-(1/3)Q(S1) P=(3/4)Q-2001. Find the equilibrium price and quantity (Pe1, Qe1) for commodity X,elasticity of demand and supply at equilibrium point (Ed1, Es1)?2. Demand for commodity X increase 50% in order to become D2,(D2) P=???Find the equilibrium price and quantity (Pe2, Qe2) between D2 and S13. Supply for commodity X increase 40% in order to become S2,(S2) P=???Find the equilibrium price and quantity (Pe3, Qe3) between D2 and S24. From D2 and S2, the government set the price control (Pct)4.1 Price control=120%*Pe3Pct=???What is type of price?Result of that price:Qd=???Qs=???Excess demand or excess supply?Government spending (B) ???B=???4.2 Price control=80%*Pe3Pct=???What is type of price?Result of that price?Qd=???Qs=???Excess demand or excess supply?Government spending ???B=???4.3 Tax (T)=10%Pe3T=???4.3.1 If taxe on the demand side (buyers)* Demand function and supply function after tax* Equilibrium price and quantity after tax (Pe4, Qe4)* Incidence of tax between buyers and selllers* Total government tax revenue is?4.3.2 If taxe on the supply side (sellers)* Demand function and supply function after tax* Equilibrium price and quantity after tax (Pe5, Qe5)

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* Incidence of tax between buyers and selllers* Total government tax revenue is?

Ecersice 3:The price of commodity X before tax is 10$/Kg, Tax on supply side (sellers) 3$/Kg;Ed of commodity X=-4, Es of commodity X=2. The price of commodity X after tax?

Ecersice 4:The price of commodity X before tax is 10$/Kg, the price of commodity X after tax is 12 $/Kg. Ed of commodity X=-4, Es of commodity X=2. How much tax per unit of output?

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Exercise 1:Complete the following table:

0.00 500.00100.00 750.00200.00 1,100.00300.00 1,500.00400.00 2,000.00500.00 2,600.00

Exercise 2:Complete the following table. Assume that units of fixed input cost $10 each and that unitsof variable inputs cost $20 each.

100.00 0.00 0.00100.00 20.00 600.00100.00 40.00 1,500.00100.00 60.00 2,000.00100.00 80.00 2,200.00100.00 100.00 2,300.00

Exercise 3:Given the total cost function TC=10000+9Q, where Q=units of output:a. Determine the equations for TFC and TVC, and illustrate graphically the relationships among TFC, TVC, TC.b.Determine the equation for AFC, AVC, ATC, and MC. Graphically illustrate their relationships to one another.

Exercise 4:Given the total cost function TC=20000+4Q+0.5Q^2, where Q=units of output:a. Determine the equations for TFC and TVC. Graph the TFC, TVC, and TC functions, and graphically show theirrelationships to one another. How would you describe the behavior of TVC as output increases?b. Determine the equations for AFC, AVC, ATC, and MC. Graph each of these functions, and graphically showtheir relationships to one another.

Exercise 5:Given the following information:* Q=6X, where X=units of variable input and Q=units of output.* There are 10 units of fixed input.* Price of the fixed inputs = $10/unit.* Price of the variable inputs = $5/unit.

Units of Output TFC TVC TC AFC AVC ATC

Units of Fixed Input

Units of Variable Input

Units of Variable Output

Marginal Product of Variable Input

Average Product of Variable Input TFC TVC

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Determine the corresponding equations for TFC, TVC, TC, AFC, AVC, ATC, and MC.

Exercise 6:The total cost function of a shirt manufacturer is TC=10+26Q-5Q^2+0.5Q^3, where TC is in hundreds ofdollars per month and Q is output in hundreds of shirts per month.a. What is the equation for TVC?b. What is the equation for AVC?c. What is the equation for ATC?d. What is the equation for MC?e. Plot the relationships among TFC, TVC, and TCf. Plot the relationships among AFC, AVC, AC, and MC

Exercise 7:Given TC=2000+15Q-6Q^2+Q^3, where Q= units of output:Complete the following table.

Q TFC TVC TC AFC AVC ATC0.002.004.006.008.00

10.0012.0014.0016.0018.0020.0022.0024.0026.0028.0030.0032.0034.0036.0038.0040.00

Exercise 8:Given the following cost information:AFC for 5 units of output is $2000AVC for 4 units of output is $850TC rises by $1240 when the sixth unit of output is produced

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ATC for 5 units of output is $2880It costs $1000 more to produce 1 unit of output than to produce nothing. TC for 8 units of output is $19040TVC increases by $1535 when the seventh unit of output is produced.AFC plus AVC for 3 units of output is $4185ATC falls by $5100 when out rise from 1 to 2 units.Using this information, complete the following table:

Output TFC TVC TC AFC AVC ATC0.001.002.003.004.005.006.007.008.00

Exercise 9:9.1 Use the production function:

Q=10K^(0.5)*L^(0.6)K

6.005.004.003.002.001.00

1.00 2.00 3.00 4.00 5.00 6.00

a. Complete the production table.b. For this production system, are returns to scale decreasing, constant, or increasing? Explain.c. Suppose the wage rate is $28, the price of capital also is $28 per unit, and the firm currently is producing 30.31 units of output per period using four units of capital and two units of labor. Isthis an efficient resource combination? Explain. What would be a more efficient combination?

9.2 Use the data from 9.1 to answer the following questions.a. If the rate of capital input is fixed at three and if output sells for $5 per unit, determine thetotal average, and marginal product functions and the marginal revenue product function forlabor in the following table.

L0.00

TPL APL MPL MRPL

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1.002.003.004.005.006.00

b. Using data from part a, if the wage rate is $ 28 per unit, how much labor should be employed?c. If the rate of labor input is fixed at 5 and the price of output is $5 per unit, determine the total, average, and marginal product functions for capital and the marginal revenue product of capitalin the following table

K0.001.002.003.004.005.006.00

d. Using the data from part c, if the price of capital is $40 per unit, how many units of capitalshould be employed?

Exercise 10:International Publishing has kept the following data on labor input and production of textbookfor each of eight production periods.

Production period 1 2 3 4 5Labor Input 4 3 6 8 2

Output of Books 260 190 900 800 110

a. Use the data on labor input and total product to compute the average and marginal product for labor input rate from oneto eight. (Assume that a zero labor input would resuld in zero output)

L1.002.003.004.005.006.007.008.00

TPK APK MPK MRPK

QL APL MPL

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Exercise 11:The following table shows the relationship between hours of study and final examinationgrades in each of three classes for a particular student, who has a total of 15 hours to preparefor these tests. If the objective is to maximize the average grade in the three classes, how manyhours should this student allocate to preparation for each of these classes? Explain your approach to this problem.

Economics Mathematics ManagementHours Grade Hours Grade Hours Grade0.00 40.00 0.00 50.00 0.00 30.001.00 50.00 1.00 60.00 1.00 50.002.00 59.00 2.00 69.00 2.00 60.003.00 67.00 3.00 77.00 3.00 66.004.00 74.00 4.00 84.00 4.00 71.005.00 79.00 5.00 90.00 5.00 74.006.00 83.00 6.00 95.00 6.00 76.007.00 86.00 7.00 96.00 7.00 77.008.00 88.00 8.00 97.00 8.00 77.009.00 89.00 9.00 97.00 9.00 77.00

10.00 89.00 10.00 97.00 10.00 77.00

Exercise 12:Given the total cost function:

TC=1000+10Q-0.9Q^2+0.04Q^3find the rate of output that results in minimum average variable cost.

Exercise 13:MicroApplications Inc. is a small firm that specializes in the production and mail-order distribution of computer programs for microcomputers. The acounting deparment has gathered the followingdata on development and production costs for a typical program and the documenttation that must accompany the program.Development cost (fixed):

Program development 10,000.00Manual preparation and typesetting 3,000.00Advertising 10,000.00Total 23,000.00

Variable costs per unit:Blank disk 2.00Loading cost 0.50Postage and handling 1.25

b. Draw, on one set of axes the QL, APL, MPL

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Printing of the manual 2.75Total 6.50

A typical program of this type, including the manual, sells for $40. Base on this information:a. Determine the break even munber of programs and the total revenue associate with this volume.b. MicroApplications has a minimum profit target of $40000 on each new program it develops.Determine the unit and dollar volume of sales required to meet this goal.c. While this program is still in the development stage, market prices for software fall by 25 percentdue to a significant increase in the number of programs being supplied to the market. Determinethe new break even unit and dollar volumes.

Exercise 14:A firm is considering the rental of a new copying machine. The rental terms of each of the three machines under consideration are given here:

Costs

A 1,000.00 0.03B 300.00 0.04C 100.00 0.05

How many copies per month would the firm have to make for B to be a lower total cost machinethan C? For A to be lower cost than B?

Exercise 15:Suppose that the total cost equation (TC) for a monopolist is given byTC=500+20Q^2Let the demand equation be given byP=400-20QWhat are the profit-maximizing price and quantity?What are the Revenue-maximizing price and quantity?Complete the following table.

Q TC TR MC MR Profit1.002.003.004.005.006.007.008.009.00

10.0011.00

MachineMonthly Fee ($)

Per Copy ($)

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12.0013.0014.0015.00

Exercise 16:A firm sells in two markets and has constant marginal cost of production equal to $2 per unit,FC=5. The demand equations for the two markets are as follows:Market 1: Market 2:P1=14-2Q1 P2=10-Q2Use third-degree price discrimination, what are the profit-maximizing price and quantitiesin each market? Show that greater profits result from price discrimination than would beobtained if a uniform price were used.

Exercise 17:An automobile manufacturer estimates that total variable costs will be $500 million andtotal fixed costs will be $1 billion in the next year. In setting prices, it is assumed thatsales will be 80% of the firm's 125000 vehicle per year capacity, or 100000 units. Thetarget rate of return is 10 percent, which is to be earned on an investment of $2 billion.If prices are set on a cost-plus basic, what price should be charged for each automobile?

Exercise 18:Smith Distributing sells video cassettes in two separable markets. The marginal cost

a. If the firm uses third degree price dismination, what will be the profit maximizing priceand quantity in each market? How much economic profit will the firm earn?b. If the firm charges the same price in both markets, what will be the profit maximizingprice and total quantity? How much economic profit will the firm earn?

Exercise 19:Global motors sells its automobies in both the United States and Japan. Due to traderestriction, a vehicle sold in one country cannot be resold in the other. The demandfunctions for the two countries areUS P=30000-0.4QJapan P=20000-0.2QThe firm's total cost function is TC=10,000,000+12,000Q. What price should Globalcharge in each country in order to maximize profit? What will be the total profit?

Exercise 20:A firm produces two types of calculators, x and y. The revenue and cost equations areshown below with Qx and Qy measured in thousands of calculators per year.Total revenue=2Qx+3Qy

of each cassettes is $2, FC=10. For the first market, demand is given by: Q1=20-5P1, The demand

equation for the second market is: Q2=20-2P2

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Total cost=Qx^2-2Qx*Qy-2Qy^2+6Qx+14Qy+15*10^6a. To maximize profit, how many of each type of calculator should the firm produce?b. What is the maximum profit the firm can earn?

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a. Determine the equations for TFC and TVC, and illustrate graphically the relationships among TFC, TVC, TC.b.Determine the equation for AFC, AVC, ATC, and MC. Graphically illustrate their relationships to one another.

a. Determine the equations for TFC and TVC. Graph the TFC, TVC, and TC functions, and graphically show theirrelationships to one another. How would you describe the behavior of TVC as output increases?b. Determine the equations for AFC, AVC, ATC, and MC. Graph each of these functions, and graphically show

MC

TC AFC ATC MC

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The total cost function of a shirt manufacturer is TC=10+26Q-5Q^2+0.5Q^3, where TC is in hundreds of

MC

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MC

L

c. Suppose the wage rate is $28, the price of capital also is $28 per unit, and the firm currently is

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b. Using data from part a, if the wage rate is $ 28 per unit, how much labor should be employed?c. If the rate of labor input is fixed at 5 and the price of output is $5 per unit, determine the total, average, and marginal product functions for capital and the marginal revenue product of capital

6 7 87 5 1

1500 2100 50

a. Use the data on labor input and total product to compute the average and marginal product for labor input rate from one

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MicroApplications Inc. is a small firm that specializes in the production and mail-order distribution of computer programs for microcomputers. The acounting deparment has gathered the followingdata on development and production costs for a typical program and the documenttation that must

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a. Determine the break even munber of programs and the total revenue associate with this volume.

c. While this program is still in the development stage, market prices for software fall by 25 percentdue to a significant increase in the number of programs being supplied to the market. Determine

A firm is considering the rental of a new copying machine. The rental terms of each of the three

How many copies per month would the firm have to make for B to be a lower total cost machine

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, The demand

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Exercise 1:Suppose that as a result of an improvement in technologythe producer's supply change from: (S1) Qs=-40+20P to (S2) Qs=-10+20P1. From S1 to S2, Supply increase or decrease? Why?2. Derive this producer's old and new supply schedule?3. On one axes, draw this producer's supply curves beforeand after the improvement in technology?4. How much of commodity X does this producer supply at the price of 4$ before and after the improvement in technology?

S1 S2

P Q P Q

0 -40 0 -10

1 -20 1 10

2 0 2 30

3 20 3 50

4 40 4 70

5 60 5 90

6 80 6 110

7 100 7 130

8 120 8 150

9 140 9 170

10 160 10 190

11 180 11 210

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Exercise 2:Tablele 2.1 gives the supply schedule of the three producer of commodity X in the market. Draw, on one set of axes, the three producer's supply curves and derice geometricallythe market supply curve for commodity X

Quantity Supplied (Kg, Per time period)Producer 1 Producer 2 Producer 3

0.00 0.00 0.00 10.001.00 0.00 0.00 25.002.00 0.00 20.00 35.003.00 10.00 30.00 42.004.00 16.00 36.00 46.005.00 20.00 40.00 50.006.00 22.00 42.00 53.00

P ($/Kg)

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4. How much of commodity X does this producer supply at the price of 4$ before and after the improvement in technology?

So Supply increase

0 1 2 3 4 5 6 7 8 9 10 11 12

-80

-40

0

40

80

120

160

200

240

S1 S2

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Tablele 2.1 gives the supply schedule of the three producer of

the three producer's supply curves and derice geometrically

Quantity Supplied (Kg, Per time period)Market Supply

10.0025.0055.0082.0098.00

110.00117.00

0.00 20.000.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

Producer 1

Producer 2

Producer 3

Market Supply

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0 1 2 3 4 5 6 7 8 9 10 11 12

-80

-40

0

40

80

120

160

200

240

S1 S2

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0.00 20.000.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

Producer 1

Producer 2

Producer 3

Market Supply