1. Suppose a market demand function is specified as follows: Qd= 1000-4P (a) Est

Question

1. Suppose a market demand function is specified as follows: Qd= 1000-4P (a) Estimate the total revenue (b) What is the marginal revenue? (c) Evaluate the price elasticity of demand when price is $2 per unit. (d) Briefly explain why you may or may not increase the price of the good in question. dQ dTR 2. Imagine that a firm requires an optimal combination of labor and capital to produce a given amount of output; suppose the optimal combination is 150 units of labor and 50 units of capital. Plot the isocost and isoquant if the prices of capital and labor are $20 and $40 per unit for an output level of 2000 widgets; where (a) TC = P + PKQK and TC P. TC OK (b) Suppose the price of labor falls from $40 to $30; show and explain why the reduction in the price of labor will affect your managerial decision. (c) Imagine that the production function can be specified as follows: Q-Kaz" "(where the return to capital is 65%); estimate the marginal product of capital and labor when 50 units of capital and 150 units of labor are utilized. A cost-benefit function is defined as follows: Cost: Qc-4tQ4, and Benefit: QB-20-40% (a) Estimate the marginal cost and marginal benefits (b) Evaluate the marginal net benefit when 3. 4 units are produced.

Explanation / Answer

1) Qd= 1000 - 4P

a) Total revenue = price * quantity.

so, TR = 1000P - 4P2

b) Marginal revenue = differntiation of total revenue curve.

MR = 1000 - 8P

C) Dq /Dp = -4

at pric =$2 , quantity demanded = 992

Ed = -4 * 2 / 992

Ed = -0.08

D) we do not increase the price because the price elastiicy of demand is highly elestic and a small increase in price lead to decrease in quantity demanded . therefore we may not increase the price.

2) please upload it again. it against chegg policy .

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