MICROECONOMICS

Listed below is information onproduction for a firm that produces wheat. They can vary thenumber of workers. The land they use is fixed at one acre.

The Wage is $ 50The land costs $ 100 The wheat sells for $ 10 per unit

1) With 5 workers TOTAL PRODUCT is equal to ?# of workersMarginal product

1.....................100

2) With 3 workers TOTAL PRODUCT is equal to? 2.....................200
3.......................300
3) With 6 workers TOTAL COST is equal to ? 4....................... 50
5........................ 40
4) With 2 workers TOTAL REVENUE equal ?6........................ 10
7........................ 5

5)With 6 workers, TOTAL REVENUE is equal to ?

6)If all these workers have the same skill, why doesworker 6have a smaller MPL than worker 5?

7) How many workers should this firm hire to maximize its profits ?

8) If this firm does hire the number of workers you answered for question (7), they will have TOTAL PROFITS equal to ?

9) If all these workers have the same level of skill, why does worker 3 have a larger marginal product than worker 2 ?

10) What is the amount of TOTAL FIXED costs for this firm and for all firms in the LONG run.?

Answer questions (11) -(16) based on this information on the production function for a firm:

Amount of Labor Capital Output

(A) 6 100 50

(B) 12 200 200

(C ) 24 400 300

(D) 48 800 600

(11) Between point (A) and (B) this firm has _______________________returns to scale ?

(12) Between points (A) and (B) this firm has Long Run AC that are____________.?

(13) Between point (B) and (C) this firm has _______________________returns to scale ?

(14) Between points (B) and (C) this firm has Long Run AC that are____________.?

(15) Between point (C) and (D) this firm has _______________________returns to scale ?

(16) Between points (C) and (D) this firm has Long Run AC that are____________.?

Answer all the questions below by looking at the average cost, marginal cost and demandcurves for firm X shown here:

17) What kind of industry is this firm in ?

18) On the diagram above, AVERAGE FIXED COST is the HIGHEST at .what Quantity ?

19) On the diagram above, AVERAGE FIXED COST is the LOWEST at. what Quantity ?

20) If the market Price =$80 what is the profit maximizing output level for this firm ?

21)At the output level you answered for question (20), what will be the TOTAL PROFITS for this firm?

22) What is the maximum technical efficiency output for this firm ?

23) This firm would produce what output if the market price was $20 ?

24) How much profits would this firm make if the price was $20 ?

25) What is the lowest price at which this firm would continue to operate in the LONG run ?

Wrote the LETTER of the correct answer for each question below:

26) If the AC of producing the product FALLS as new firms enter an industry, this industry will have a Long Run supply curve that has a slope that is (A) negative (B) positive (C) flat (D) could be any of these.

27) If the AC of producing the product RISES as new firms enter an industry, this industry will have a Long Run supply curve that has a slope that is (A) negative (B) positive (C) flat (D) could be any of these.

28) If the AC of producing the product DOES NOT CHANGE as new firms enter an industry, this industry will have a Long Run supply curve that has a slope that is (A) negative (B) positive (C) flat (D) could be any of these.