ECONOMICS W/CONNECT+20 >C<
20th Edition
ISBN: 9781259714993
Author: McConnell
Publisher: MCG CUSTOM
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Chapter 15, Problem 5DQ
To determine
Reason behind the success of a new product.
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Consider a small landscaping company run by Mr. Viemeister. He is considering increasing his firm’s capacity. If he adds one more worker, the firm’s total monthly revenue will increase from $50,000 to $58,000. If he adds one more tractor, monthly revenue will increase from $50,000 to $62,000. Each additional worker costs $4,000 per month, while an additional tractor would also cost $4,000 per month. LO16.5 a. What is the marginal product of labor? The marginal product of capital? b. What is the ratio of the marginal product of labor to the price of labor (MPL/PL)? What is the ratio of the marginal product of capital to the price of capital (MPK/PK)? c. Is the firm using the least-costly combination of inputs? d. Does adding an additional worker or adding an additional tractor yield a larger increase in total revenue for each dollar spent?
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TFC
$5
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TVC
$0
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5
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A profit-maximizing firm should produce a quantity of
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$5
8
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units. (Enter your response as a whole number.)
4. You are the manager of a firm that produces products X and Y at zero cost. Youknow that different types of consumers value your two products differently, but you are unable toidentify these consumers individually at the time of the sale. In particular, you know there arethree types of consumers (100 of each type) with the following valuations for the two products:
Consumer Type Product X Product Y1 $90 $ 602 $70 $1403 $40 $160
a. What are your profits if you charge $40 for product X and $60 for product Y?b. What are your profits if you charge $90 for product X and $160 for product Y?c. What are your profits if you charge $150 for a bundle containing one unit of product X andone unit of product Y?d. What are your profits if you charge $210 for a bundle containing one unit of X and one unit ofY, but also sell the…
Chapter 15 Solutions
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- If your customers have the following demand curve, what price would maximize your total revenue? What would total revenue be at that price? Price $20 18 16 14 12 10 8 6 4 2 0 2 O $10; $100 O $0; $100 O $20; $200 O $5; $100 4 6 8 10 12 14 16 18 20 Quantity A Moving to another question will save this response. Quarrow_forward.ll touch LTE 10:05 PM O 9 37% O A docs.google.com In a perfectly competitive market, what happens to a firm's profit-maximizing level of output if the price of the product falls? * Because the firm maximizes profit by setting marginal revenue equal to O marginal cost, an increase in the price of the product will reduce the firm's profit-maximizing level of output. Because the firm maximizes profit by setting marginal revenue equal to marginal cost, a decline in the price of the product will not affect the firm's profit-maximizing level of output. Because the firm maximizes profit by setting marginal revenue equal to marginal cost, a decline in the price of the product will reduce the firm's profit-maximizing level of output. Because the firm maximizes profit by setting marginal revenue equal to marginal cost, a decline in the price of the product will increase the firm's profit-maximizing level of output.arrow_forwarda. b. Test Your Understanding Price Supply 1 $4.00 60 4.25 70 4.50 80 4.75 90 (5.00 100 5.25 110 5.50 120 What are equilibrium price and quantity? Supply increases by 50% - what are the new equilibrium price and quantity? Demand 140 130 120 110 100 90 80 2014 McGraw-Hill Ryerson Limited Supply 2 LO6 2-45arrow_forward
- Fill in the columns in the following table. (Enter your responses as whole numbers.) TFC TVC $5 $0 5 3 q 0 1 2 3 4 5 5 5 5 5 5 5 9 16 25 36 ԼՈ MC P = MR $5 5 5 5 S LO 5 40 5 5 TR $0 TC $5 Profit $-5arrow_forward7. Short-run and long-run effects of a shift in demand Suppose that the perfectly competitive tuna industry is in long-run equilibrium at a price of $3 per can of tuna and a quantity of 600 million cans per year. Suppose the Surgeon General issues a report saying that eating tuna is good for your health. The Surgeon General's report will cause consumers to demand tuna at every price. In the short run, firms will respond by Shift the supply curve, the demand curve, or both on the following diagram to illustrate these short-run effects of the Surgeon General's announcement. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. Supply Demand Supply Demand 1 200 400 600 800 1000 1200 QUANTITY (Millions of cans) PRICE (Dollars per can)arrow_forward1. Let (inverse) demand be Pb = 115 - 5 Qb and (inverse) supply be Pv = 29 + 4 Qv. What price will prevail in the market if it is competitive? Answer: your answer Price ($) $140 $120 $100 $80 $ 60 $40 $20 $0 0 8 LO 5 Submit Demand 10 Supply Quantity 15 Eqm 20 25arrow_forward
- Question 24 Assume there are 100 suppliers of widgets in the widget market. Half of these suppliers supply 35 widgets to the market, a quarter of these suppliers supply 4o widgets to the market, and a quarter of these suppliers supply 50 widgets to the market. What is the market supply for widgets? 1,750 100 O 4,000 400 O 125arrow_forward1. The table below represents the demand for Widgets, Inc., which has a monopoly in the sale of widgets. Calculate total revenue and marginal revenue for the levels of output given. Draw the demand curve and the marginal revenue curve in a same graph. Quantity 0 1 2 3 4 LO 5 Price $25 21 17 13 9 LO 5arrow_forwardO 560 O 620 QUESTION 4 For a non-competitive firm with a demand curve P = 1800-2Q and marginal costs of MC = $200, how much is the equilibrium price (P*)? O $500 O $750 O $1000 O $1250 QUESTION 5 For a non-competitive firm with a demand curve P = 1800-2Q and marginal costs of MC = $200, how much is the consumer surplus or net consumer value? O $160,000 O $480,000 $560,000 O $620,000 Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answers 1p 1 p Feb 28arrow_forward
- The following figure shows the revenue and cost curves for a firm X. RM 10 a. b. C. 7 6 LO 5 4 3.5 0 20 25 30 MC 40 AVC AC AR=MR Units If a firm X achieves productivity efficiency, what will be the total revenuel generated At what price will a firm stop operating? Please explain. If the market price is RM4.00, what is the total profit or total loss.arrow_forwardUse the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Goods 100 90 I Quantity Demanded 25 80 (Units) Demand Price (Dollars per unit) 70 50.00 60 50 40 30 Demand 20 10 10 15 20 25 30 35 40 45 50 QUANTITY (Units) PRICE (Dollars per unit)arrow_forwardDone 4 LO 5 6 Question 3 **** Question 4 Question 5 199 + © ** D.J ECO-205 As...) O'Neill copy Question 4 What would happen to equilibrium price and equilibrium quantity of khaki pants if...the price of the cloth used to make khaki pants falls? A B S Price Slide 5 of 6 Eq 0₁ Ea. Q₂ D Quantity 5 Price Price Eg с 5 P₂ Eq P₁ D₂ Q₂ Quantity Q₁ 0₂ Quantity Describe the impact on equilibrium price and equilibrium quantity... what happened, and why? (Type your answer here.) The equilibrium price will go down due to the price decline of cloth. Companies have the ability to make different products at lower prices, making the equilibrium quantity decrease because fewer khaki pants are being made. A Drag this circle and place around the letter below for your answer. Price t%₂ P₁ P₂ 0₂ Notes Ơ : Q₁ 5 Quantity Comments :arrow_forward
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