Question 1. a. Using the data from table, calculate the elasticity of demand and elasticity of supply at each price change in the market for financial calculators using the midpoint formula for both supply and demand.
|
Price
|
Quantity Demanded
|
Elasticity of Demand
|
Quantity Supplied
|
Elasticity of Supply
|
|
$10
|
50,000
|
45000.15
|
3,000
|
|
|
$20
|
40,000
|
|
10,000
|
6500.15
|
|
$30
|
25,000
|
32500.25
|
15,000
|
12500.25
|
|
$40
|
20,000
|
17500.45
|
20,000
|
25000.45
|
|
$50
|
15,000
|
13500.55
|
30,000
|
37500.55
|
|
$60
|
12,000
|
8500.65
|
45,000
|
50000.65
|
|
$70
|
5,000
|
8500.65
|
55,000
|
50000.65
|
|
$80
|
2,000
|
3500.75
|
75,000
|
65000.75
|
b. Based on your elasticity calculation, if the price of financial calculators rises from $40 to $50 will total revenue go up or down? By how much?
Question 2. Your factory makes staplers.
a. Calculate the costs (TVC, AVC, AFC, TC, ATC, and MC) per day, given:
FC = $500
Each worker costs $100 per day
Materials to make the stapler cost $3 per stapler
b. Create two graphs.
On the first graph plot, AVC, AFC, ATC, and MC.
On the second graph, plot TVC, TFC and TC.
Don't forget to label your graphs clearly including the units used.
c. What level of production will minimize marginal costs? How many workers should they hire?
|
# of Workers
|
Q
|
TVC
|
AVC
|
AFC
|
TC
|
ATC
|
MC
|
|
|
|
|
VC / Q
|
FC / Q
|
FC + VC
|
TC/Q
|
|
|
|
|
|
?TC
?Q
|
|
0
|
0
|
0
|
|
|
|
|
|
|
1
|
100
|
|
|
|
|
|
|
2
|
250
|
|
|
|
|
|
|
3
|
400
|
|
|
|
|
|
|
4
|
800
|
|
|
|
|
|
|
5
|
1000
|
|
|
|
|
|
|
6
|
1050
|
|
|
|
|
|