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Homework 3 Unsolved Questions - Principles of Microeconomics | ECON 206, Assignments of Microeconomics

Material Type: Assignment; Class: Prin of Microeconomics; Subject: Economics; University: Shepherd University; Term: Spring 2009;

Typology: Assignments

Pre 2010

Uploaded on 08/18/2009

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THE PROBLEM BELOW IS DUE FOR HOMEWORK ON THURSDAY, FEBRUARY 12
Total Points = 40
NAME___________________________
1. George and Martha’s Farm sits on ten acres of land. No more acres are
available to them and they are currently unable to either increase or decrease
the size of their farm by selling, buying, or leasing land. On the other hand,
George and Martha are free to decide how many workers to hire. Their
production function is shown in the table below.
Quantity of labor
(# of workers hired)
Quantity of wheat
(bushels)
Marginal physical product
of labor
0 0 ------
1 19
2 36
3 51
4 64
5 75
a. Is the production function above a short-run or a long-run
production function? Explain briefly how you know. (2 points)
b. Graph the production function in the graph on page 2.
(3
points)
1
pf3
pf4
pf5

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THE PROBLEM BELOW IS DUE FOR HOMEWORK ON THURSDAY, FEBRUARY 12

Total Points = 40 NAME___________________________

  1. George and Martha’s Farm sits on ten acres of land. No more acres are available to them and they are currently unable to either increase or decrease the size of their farm by selling, buying, or leasing land. On the other hand, George and Martha are free to decide how many workers to hire. Their production function is shown in the table below. Quantity of labor (# of workers hired) Quantity of wheat (bushels) Marginal physical product of labor 0 0 ------ 1 19 2 36 3 51 4 64 5 75 a. Is the production function above a short-run or a long-run production function? Explain briefly how you know. (2 points) b. Graph the production function in the graph on page 2. ( points)

Quantity of Wheat (bushels) 80 70 60 50 40 30 20 10 0 1 2 3 4 5 Quantity of Labor

MPPL (bushels) 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 1 2 3 4 5 Quantity of Labor f. Draw a graph showing George and Martha’s marginal cost (MC) curve on the axes below. Numbers are not necessary, but briefly explain why you drew it like you did. (3 points) Marginal Cost Quantity of Wheat(Q)

  1. Fill in the values for the various “costs” in the table below using information from the graph and performing calculations with relevant formulas. Indicate whether you derived each value from the graph or from a calculation. If from a calculation, show the work that you did. ( HINT: Put all the values you can read from the graph into the table first, and then work with those and appropriate cost formulas to figure out the rest). (17 points) QUANTITY

TOTAL

FIXED

COST

TOTAL

VARIABLE

COST

TOTAL

COST

MARGINAL

COST

AVERAGE

VARIABLE

COST

AVERAGE

TOTAL

COST

Costs ($) MC ATC AVC 12 10 8 4 5 Quantity