Assignment
1. Advice for a Firm. You've been hired as an economic consultant by a price-taking firm that produces scarves. The firm already has a factory, so it is operating in the short run. The price of scarves is $9, the cost per worker is $24, and each scarf requires $1 worth of material. The following table shows the relationship between the number of workers and the output of scarves.
a. Fill in the blanks in the table. (Enter all of your responses as integers.)
|
Workers
|
10
|
11
|
12
|
13
|
14
|
15
|
|
Output
|
5
|
29
|
41
|
47
|
50
|
52
|
|
Labor cost
|
$240
|
264
|
nothing
|
312
|
336
|
360
|
|
Material cost
|
$5
|
29
|
nothing
|
47
|
50
|
52
|
|
Fixed cost
|
$2
|
2
|
2
|
2
|
2
|
2
|
|
Total cost
|
$247
|
295
|
nothing
|
361
|
388
|
414
|
|
Marginal cost
|
--
|
$2
|
nothing
|
5
|
9
|
13
|
2. Advice for an Unprofitable Firm. You've been hired as an economic consultant by an unprofitable price-taking firm that produces baseball caps. The firm already has a factory, so it is operating in the short run. The price of caps is $5, the hourly wage is $12, and each cap requires $1 worth of material. The firm has experimented with different workforces and the results are shown in the first two columns of the table below.
a. Fill in the blanks in the table.
(Enter all responses as integers.)
|
Workers
|
Caps produced
|
Labor cost
|
Material cost
|
Variable cost
|
Total revenue
|
Marginal cost
|
|
14
|
56
|
nothing
|
nothing
|
nothing
|
nothing
|
--
|
|
15
|
60
|
nothing
|
nothing
|
nothing
|
nothing
|
nothing
|
3. Draw the Supply Curves. The following table shows short-run marginal costs for a perfectly competitive firm:
|
Output
|
100
|
200
|
300
|
400
|
500
|
|
MC
|
$5
|
$10
|
$20
|
$40
|
$70
|
Suppose that the shut-down price is $10, What is the minimum quantity offered to the market by this firm?
nothing
units
4. Draw the Supply Curves. The following table shows short-run marginal costs for a perfectly competitive firm:
|
Output
|
100
|
200
|
300
|
400
|
500
|
|
MC
|
$5
|
$10
|
$20
|
$40
|
$70
|
Suppose that the shut-down price is $10, What is the minimum quantity offered to the market by this firm?
nothing
units.
5.Long-Run Supply Curve of Lamps. Suppose each lamp manufacturer produces 10 lamps.
Complete the following table. (Enter all your responses as integers.)
|
Number of firms
|
Industry output
|
Total cost for typical firm
|
Average cost per lamp
|
|
40
|
nothing
|
$300
|
$nothing
|
|
80
|
nothing
|
360
|
nothing
|
|
120
|
nothing
|
440
|
nothing
|
6. Increase in Housing Demand in Britain versus the United States. a. Suppose that in both Britain and the United States, the initial equilibrium price of housing is $200,000. Britain has more severe restrictions on residential development in the short run.
1.) Use the line drawing tool to draw and label the long-run supply curve for housing in Britian.
2.) Use the line drawing tool to draw and label the long-run supply curve for housing in the United States
Carefully follow the instructions above, and only draw the required objects.
enlarge
graph.