ECONIS40, Fall 2017 Problem Set #3 due Monday, 11/10/17 Include with cach exerci

Question

ECONIS40, Fall 2017 Problem Set #3 due Monday, 11/10/17 Include with cach exercise all the calculations that you used to get the answer. Remember to label the graphs. You can work in groups but each student should turn in his own hard copy of the problem set. 1. The table below shows the total production a firm will be able to obtain if it employs varying amounts of resource X while the amounts of the other resources the firm employs remain constant. Compute the marginal product of each of the seven units of resource X and enter these figures in the table. Assume the product the firm produces sells in the market for $3.00 per unit. Compute the total revenue of the firm at each of the eight levels of output and the marginal revenue product of each of the seven units of resource X. Enter these figures in the table below. (1s poins Quantity of resource X Total Marginal Total roevenue omployed product product of X revenueof 24 72- 80 84_ On the basis of your computations complete the firm's demand schedule for resource X by indicating in the table below how many units of resource X the firm would employ at the given prices. (00 points) Quantity of X demanded Price of X $84 72 60 48 36 24 12

Explanation / Answer

Question 1). Solution :-

Quantity of resource X employed Total product Marginal product of X Total revenue Marginal revenue product of X 0 0 - 0 0 1 24 24 [(24 - 0) / (1 - 0)] 3 (1 * 3) 3 [(3 - 0) / (1 - 0)] 2 44 20 [(44 - 24) / (2 - 1)] 6 (2 * 3) 3 [(6 - 3) / (2 - 1)] 3 60 16 [(60 - 44) / (3 - 2)] 9 (3 * 3) 3 [(9 - 6) / (3 - 2)] 4 72 12 [(72 - 60) / (4 - 3)] 12 (4 * 3) 3 [(12 - 9) / (4 - 3)] 5 80 8 [(80 - 72) / (5 - 4)] 15 (5 * 3) 3 [(15 - 12) / (5 - 4)] 6 84 4 [(84 - 80) / (6 - 5)] 18 (6 * 3) 3 [(18 - 15) / (6 - 5)] 7 86 2 [(86 - 84) / (7 - 6)] 21 (7 * 3) 3 [(21 - 18) / (7 - 6)] 8 - - 24 (8 * 3) 3 [(24 - 21) / (8 - 7)]

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