EBK MICROECONOMICS
5th Edition
ISBN: 9781118883228
Author: David
Publisher: YUZU
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Question
Chapter 5, Problem 5.31P
To determine
(a)
The number of units of leisure that the consumers choose to depend on the wagerate to be determined.
To determine
(b)
Based on the wage rate the consumer's daily income is to be determined.
To determine
(c)
Whether consumer work more when the wage rate rises, are to be calculated.
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What is the concept of diminishing marginal utility of consumers? How consumer use Marginal Rate of Substitution to reach consumer equilibrium level where MRTS = Px/Py?
Problem Set
1. A firm's production function is º=50L-0.01Ľ' , where L
denotes the size of the workforce. Find the value of MP
in the case when:
(a) L=1, (b) L=10, (c) L=100, (d) L=1000
Does the law of diminishing marginal productivity apply
to this particular function?
2. Show that the price elasticity of demand is constant for
demand functions of the form
A
P =
Q"
where A and n are positive constants.
3. The demand and total cost functions of a good are
respectively 4P+Q-16=0 and
ТС %3D 4 + 20 —
10
20
a) Find expressions for TR, (profit) 1 , MR, and MC in
terms of Q.
b) Solve the equation
dn
= 0
ÕP
and hence determine the value of Q which maximizes
profit.
c) Verify that, at the point of maximum profit, MR=MC.
4. The cost of building an office complex, x floors high, in a
prime location in Accra is made up of three components:
(a) GH¢10 million for the land
(b) GH¢'/, million per floor
(e) Specialized costs of GH¢10000× per floor.
How many floors should the office complex contain if…
Terry attends college and works part-time in a drug store. She can work up to 40 hours per week and is paid $9 per hour. With her schoolwork and other responsibilities, she only has 40 hours per week total to devote to work and leisure. The following table shows her utility from different levels of leisure and income.
Hours of Leisure
Total Utility from Leisure
Marginal Utility of Leisure
Work Hours
Income
Total Utility from Income
Marginal Utility from Income
5
18
5
45
35
10
34
10
90
59
15
48
15
135
77
20
56
20
180
86
25
60
25
225
92
30
65
30
270
98
35
69
35
315
103
40
72
40
360
107
Terry decides to decrease her work hours from 20 to 10.
What will be her total utility from both leisure and income when working 10 hours per week?
Chapter 5 Solutions
EBK MICROECONOMICS
Ch. 5 - Prob. 1RECh. 5 - Prob. 2RECh. 5 - Prob. 3RECh. 5 - Prob. 4RECh. 5 - Prob. 5RECh. 5 - Prob. 6RECh. 5 - Prob. 7RECh. 5 - Prob. 8RECh. 5 - Prob. 9RECh. 5 - Prob. 10RE
Ch. 5 - Prob. 5.1PCh. 5 - Prob. 5.2PCh. 5 - Prob. 5.3PCh. 5 - Prob. 5.4PCh. 5 - Prob. 5.5PCh. 5 - Prob. 5.6PCh. 5 - Prob. 5.7PCh. 5 - Prob. 5.8PCh. 5 - Prob. 5.9PCh. 5 - Prob. 5.10PCh. 5 - Prob. 5.11PCh. 5 - Prob. 5.12PCh. 5 - Prob. 5.13PCh. 5 - Prob. 5.14PCh. 5 - Prob. 5.15PCh. 5 - Prob. 5.16PCh. 5 - Prob. 5.17PCh. 5 - Prob. 5.18PCh. 5 - Prob. 5.19PCh. 5 - Prob. 5.20PCh. 5 - Prob. 5.21PCh. 5 - Prob. 5.22PCh. 5 - Prob. 5.23PCh. 5 - Prob. 5.24PCh. 5 - Prob. 5.25PCh. 5 - Prob. 5.26PCh. 5 - Prob. 5.27PCh. 5 - Prob. 5.28PCh. 5 - Prob. 5.29PCh. 5 - Prob. 5.30PCh. 5 - Prob. 5.31PCh. 5 - Prob. 5.32PCh. 5 - Prob. 5.33P
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- Recent research confirms that the demand for cigarettes is not only inelastic, but it also indicates that smokers with incomes in the lower half of all incomes respond to a given price increase by reducing their purchases by amounts that are more than four times as large as the purchase reductions made by smokers in the upper half of all incomes. How can the income and substitution effects of a price change help explain this finding?arrow_forwardTerry attends college and works part-time in a drug store. She can work up to 40 hours per week and is paid $9 per hour. With her schoolwork and other responsibilities, she only has 40 hours per week total to devote to work and leisure. The following table shows her utility from different levels of leisure and income. Hours of Leisure Total Utility from Leisure Marginal Utility of Leisure Work Hours Income Total Utility from Income Marginal Utility from Income 5 18 5 45 35 10 34 10 90 59 15 48 15 135 77 20 56 20 180 86 25 60 25 225 92 30 65 30 270 98 35 69 35 315 103 40 72 40 360 107 Terry decides to decrease her work hours from 20 to 10. 8. What would be marginal utility loss from less income?arrow_forwardJuan is currently working in a job that pays $25 an hour and he chooses to work 8 hours per day. Assume that Juan can work a maximum of 16 hours a day, and he has complete flexibility in how many hours a day he works. Illustrate Juan’s budget constraint and his optimal choice of consumption and leisure. What is the slope of his budget constraint? What does this slope represent? (As on any graph you draw, make sure that you label the axes, the intercepts and the optimal choice.) Juan begins receiving a government transfer payment of $100 per day. Add his new budget constraint to your graph in (a) and show his new optimal choice. Does he choose more or less consumption? More or less leisure? Explain why for both goods. The government imposes a tax of 25% on Juan’s earnings from work and increases his government transfer to $150 per day (the government transfer payment is not taxed.) Redraw the budget constraint from part (b) (omit the part (a) budget constraint), and add a new budget…arrow_forward
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