37 This question is a sequel to Question 35 from Problem Set 9 So you don't have to look it up, the following table shows prices and corresponding estimates of quantity demanded for a firm's product Quantity Price ($) Demanded 40 0 35 5 30 10 25 15 20 20 15 25 10 30 5 35 40 Hint 1 It's best to solve all of this Question 37 using calculus Start by finding an equation for the demand function Find the price elasticity of demand between P $35 and P $30 and between P $15 and P $10 In which price range is demand more elastic (i e , in which price range does the price elasticity of demand have a higher absolute value) Explain why Continued one 25 A company ma 18 A small business sells custom oak moldings in 12 foot selling price is lengths One molding type has the revenue function function is lin weekly bookcases an R(x) 69x (a) Write the and the cost function (b) Write the C(x) 1400 55x (c) Find the 26 A company Find the number of 12 foot lengths of this molding that them for $50 must be sold to break even the total cost 19 A manufacturer sells belts for $12 per unit The fixed costs total cost for are $1600 per month, and the variable cost per unit is $8 that (a) Write th (a) Write the equations of the revenue and cost (b) Write th functions (b) Find the break even point (c) Find the 20 A manufacturer sells watches for $50 per unit The fixed cost related to this product is $10,000 per month, In Problems 27 nd and the variable cost per unit is $30 (R), total cost ( (a) Write the equations of the revenue and cost functions profit (P) are sh (b) How many watches must be sold to break even (a) Corre 21 (a) Write the profit function for Problem 19 (b) Carefu (b) Set profit equal to zero and solve for x Compare functi this x value with the break even point from Prob 27 lem 19(b) 22 (a) Write the profit function for Problem 20 (b) Set profit equal to zero and solve for x Compare this x value with the break even point from Prob lem 20(b) 23 Electronic equipment manufacturer Dynamo Electric Inc makes several types of surge protectors Their base model surge protector has monthly fixed costs of $1045 This particular model wholesales for $10 each and costs $4 50 per unit to manufacture SUPPLY, DE (a) Write the function for Dynamo's monthly total costs (b) Write the function for Dynamo's monthly total 29 As the p revenue demand (c) Write the function for Dynamo's monthly profit 30 As the p (d) Find the number of this type of surge protector supply that Dynamo must produce and sell each month to break even The graphs 24 Financial Paper Inc is a printer of checks and forms for for a certain financial institutions For individual accounts, boxes answer the of 200 checks cost $0 80 per box to print and package and sell for $4 95 each Financial Paper's monthly fixedone 25 A company ma 18 A small business sells custom oak moldings in 12 foot selling price is lengths One molding type has the revenue function function is lin weekly bookcases an R(x) 69x (a) Write the and the cost function (b) Write the C(x) 1400 55x (c) Find the 26 A company Find the number of 12 foot lengths of this molding that them for $50 must be sold to break even the total cost 19 A manufacturer sells belts for $12 per unit The fixed costs total cost for are $1600 per month, and the variable cost per unit is $8 that (a) Write th (a) Write the equations of the revenue and cost (b) Write th functions (b) Find the break even point (c) Find the 20 A manufacturer sells watches for $50 per unit The fixed cost related to this product is $10,000 per month, In Problems 27 nd and the variable cost per unit is $30 (R), total cost ( (a) Write the equations of the revenue and cost functions profit (P) are sh (b) How many watches must be sold to break even (a) Corre 21 (a) Write the profit function for Problem 19 (b) Carefu (b) Set profit equal to zero and solve for x Compare functi this x value with the break even point from Prob 27 lem 19(b) 22 (a) Write the profit function for Problem 20 (b) Set profit equal to zero and solve for x Compare this x value with the break even point from Prob lem 20(b) 23 Electronic equipment manufacturer Dynamo Electric Inc makes several types of surge protectors Their base model surge protector has monthly fixed costs of $1045 This particular model wholesales for $10 each and costs $4 50 per unit to manufacture SUPPLY, DE (a) Write the function for Dynamo's monthly total costs (b) Write the function for Dynamo's monthly total 29 As the p revenue demand (c) Write the function for Dynamo's monthly profit 30 As the p (d) Find the number of this type of surge protector supply that Dynamo must produce and sell each month to break even The graphs 24 Financial Paper Inc is a printer of checks and forms for for a certain financial institutions For individual accounts, boxes answer the of 200 checks cost $0 80 per box to print and package and sell for $4 95 each Financial Paper's monthly fixedCost Curves NAME Introduction Here you continue to work on cost functions Total cost can be divided into fixed cost, the part that doesn't change as output changes, and variable cost To get the average (total) cost, average fixed cost, and average variable cost, just divide the appropriate cost function by y, the level of output The marginal cost function is the derivative of the total cost function with respect to output or the rate of increase in cost as output increases, if you don't know calculus Remember that the marginal cost curve intersects both the average cost curve and the average variable cost curve at their minimum points So to find the minimum point on the average cost curve, you simply set marginal cost equal to average cost and similarly for the minimum of average variable cost Example A firm has the total cost function C(y) 100 10y Let us find the equations for its various cost curves Total fixed costs are 100, so the equation of the average fixed cost curve is 100 y Total variable costs are 10y, so average variable costs are 10y y 10 for all y Marginal cost is 10 for all y Average total costs are (100 10y) y 10 10 y Notice that for this firm, average total cost decreases as y increases Notice also that marginal cost is less than average total cost for all y 22 1 (0) Mr Otto Carr, owner of Otto's Autos, sells cars Otto buys butes for $c each and has no other costs What if he (a) What is his total cost if he sells 10 cars Write down the equation for Otto's total costs sells 20 cars assuming he sells y cars TC(y) For every (b) What is Otto's average cost function AC(y) additional auto Otto sells, by how much do his costs increase Write down Otto's marginal cost function MC(y) (c) In the graph below draw Otto's average and marginal cost curves if c 20 Cost Curves NAME Introduction Here you continue to work on cost functions Total cost can be divided into fixed cost, the part that doesn't change as output changes, and variable cost To get the average (total) cost, average fixed cost, and average variable cost, just divide the appropriate cost function by y, the level of output The marginal cost function is the derivative of the total cost function with respect to output or the rate of increase in cost as output increases, if you don't know calculus Remember that the marginal cost curve intersects both the average cost curve and the average variable cost curve at their minimum points So to find the minimum point on the average cost curve, you simply set marginal cost equal to average cost and similarly for the minimum of average variable cost Example A firm has the total cost function C(y) 100 10y Let us find the equations for its various cost curves Total fixed costs are 100, so the equation of the average fixed cost curve is 100 y Total variable costs are 10y, so average variable costs are 10y y 10 for all y Marginal cost is 10 for all y Average total costs are (100 10y) y 10 10 y Notice that for this firm, average total cost decreases as y increases Notice also that marginal cost is less than average total cost for all y 22 1 (0) Mr Otto Carr, owner of Otto's Autos, sells cars Otto buys butes for $c each and has no other costs What if he (a) What is his total cost if he sells 10 cars Write down the equation for Otto's total costs sells 20 cars assuming he sells y cars TC(y) For every (b) What is Otto's average cost function AC(y) additional auto Otto sells, by how much do his costs increase Write down Otto's marginal cost function MC(y) (c) In the graph below draw Otto's average and marginal cost curves if c 20 14 At the current steady state capital labor ratio, assume that the steady state level of per capita consumption, (C N) , is less than the golden rule level of steady state per capita consumption Given this information, we can be certain that A) an increase in the saving rate will cause an increase in the steady state level of per capita consumption ( (C N ) ) B) a reduction in the capital labor ratio will cause a reduction in (C N) C) the capital labor ratio will tend to increase over time D) the capital labor ratio will tend to decrease over time E) a reduction in the saving rate will have an ambiguous effect on (C N) Answer 15 In the absence of technological progress, which of the following is true when the economy is operating at the steady state A) the growth of output per worker is zero B) the growth of output per worker is equal to the saving rate () the growth of output per worker is equal to the rate of investment D) the growth of output per worker is equal to the rate of depreciation E) none of the above Answer 16 Which of the following represents a dimension of technological progress A) larger quantities of output for given quantities of capital and labor Bj better products C) a larger variety of products D) new products Ey all of the above Answer 17 When the production function is represented by Y NA, labor productivity is represented by which of the following expressions A)VA BINA CAY D) YA Ey none of the above Answer 18, If the nominal interest rate 8 and expected inflation 3 , the expected real interest rate in year t is approximately A)2 D) 8 Answer Part A Cercle the choice that best describes the statement (4 points) ilibrium refers to the situation when the consumer is getting 2 of 5 utility out of spending a given budget on various goods inal utility out of spending a given budget on various goods utility values from each product consumed D equal total utility values from each product consumed 2 Assume that a consumer purchases a combination of products Y and Z and that the MUWPy 50 and MUZ P 32 To maximize utility, without spending more money, the consumer should A purchase less of Y and more of Z B purchase more of Y and less of Z C purchase more of both Y and Z D make no change in the quantities Y and Z E none of the above 3 If the short run average variable cost of production for a firm is decreasing, then it follows that A average variable cost must be above average fixed cost B marginal cost must be below average variable cost C average fixed cost must be constant D marginal cost must be decreasing 4 Let assume that a production function is Q L K where L is labor, and K is capital Then, if we multiply output by 4 will result to multiply all resources by 4 That means 40 4 L K Which of the following is correct A there are increasing returns to scale B the long run average total cost curve is flat C the law of diminishing returns is proven wrong D the example is for the short run rather than the long run E none of the above Problem 1 (4 points) A consumer's utility function is U 10X Y The price of good X is Pi $10 and the price of good Y is Py $5 His income is M $150 and his MRSxy Lar What is his optimal consumption bundle Show this bundle in a graph ANSWER ABOVE THE PREVIOUS LINE IS NOT GRADED

Question

37  This question is a sequel to Question 35 from Problem Set  9  So you don't have to look it up, the following table shows prices and corresponding estimates of quantity demanded for a firm's product   Quantity Price ($) Demanded 40 0 35 5 30 10 25 15 20 20 15 25 10 30 5 35 40 Hint  1  It's best to solve all of this Question 37 using calculus  Start by finding an equation for the demand function  Find the price elasticity of demand between P   $35 and P   $30  and between P   $15 and P   $10  In which price range is demand more elastic (i e , in which price range does the price elasticity of demand have a higher absolute value)  Explain why  Continued   one 25  A company ma 18  A small business sells custom oak moldings in 12 foot selling price is lengths  One molding type has the revenue function function is lin weekly bookcases an R(x)   69x (a) Write the and the cost function (b) Write the C(x)   1400   55x (c) Find the 26  A company Find the number of 12 foot lengths of this molding that them for $50 must be sold to break even  the total cost 19  A manufacturer sells belts for $12 per unit  The fixed costs total cost for are $1600 per month, and the variable cost per unit is $8  that (a) Write th (a) Write the equations of the revenue and cost (b) Write th functions  (b) Find the break even point  (c) Find the 20  A manufacturer sells watches for $50 per unit  The fixed cost related to this product is $10,000 per month, In Problems 27 nd and the variable cost per unit is $30  (R), total cost ( (a) Write the equations of the revenue and cost functions  profit (P) are sh (b) How many watches must be sold to break even  (a) Corre 21  (a) Write the profit function for Problem 19  (b) Carefu (b) Set profit equal to zero and solve for x  Compare functi this x value with the break even point from Prob  27  lem 19(b)  22  (a) Write the profit function for Problem 20  (b) Set profit equal to zero and solve for x  Compare this x value with the break even point from Prob  lem 20(b)  23  Electronic equipment manufacturer Dynamo Electric Inc  makes several types of surge protectors  Their base model surge protector has monthly fixed costs of $1045  This particular model wholesales for $10 each and costs $4 50 per unit to manufacture  SUPPLY, DE (a) Write the function for Dynamo's monthly total costs  (b) Write the function for Dynamo's monthly total 29  As the p revenue  demand (c) Write the function for Dynamo's monthly profit  30  As the p (d) Find the number of this type of surge protector supply  that Dynamo must produce and sell each month to break even  The graphs 24  Financial Paper Inc  is a printer of checks and forms for for a certain financial institutions  For individual accounts, boxes answer the of 200 checks cost $0 80 per box to print and package and sell for $4 95 each  Financial Paper's monthly fixedone 25  A company ma 18  A small business sells custom oak moldings in 12 foot selling price is lengths  One molding type has the revenue function function is lin weekly bookcases an R(x)   69x (a) Write the and the cost function (b) Write the C(x)   1400   55x (c) Find the 26  A company Find the number of 12 foot lengths of this molding that them for $50 must be sold to break even  the total cost 19  A manufacturer sells belts for $12 per unit  The fixed costs total cost for are $1600 per month, and the variable cost per unit is $8  that (a) Write th (a) Write the equations of the revenue and cost (b) Write th functions  (b) Find the break even point  (c) Find the 20  A manufacturer sells watches for $50 per unit  The fixed cost related to this product is $10,000 per month, In Problems 27 nd and the variable cost per unit is $30  (R), total cost ( (a) Write the equations of the revenue and cost functions  profit (P) are sh (b) How many watches must be sold to break even  (a) Corre 21  (a) Write the profit function for Problem 19  (b) Carefu (b) Set profit equal to zero and solve for x  Compare functi this x value with the break even point from Prob  27  lem 19(b)  22  (a) Write the profit function for Problem 20  (b) Set profit equal to zero and solve for x  Compare this x value with the break even point from Prob  lem 20(b)  23  Electronic equipment manufacturer Dynamo Electric Inc  makes several types of surge protectors  Their base model surge protector has monthly fixed costs of $1045  This particular model wholesales for $10 each and costs $4 50 per unit to manufacture  SUPPLY, DE (a) Write the function for Dynamo's monthly total costs  (b) Write the function for Dynamo's monthly total 29  As the p revenue  demand (c) Write the function for Dynamo's monthly profit  30  As the p (d) Find the number of this type of surge protector supply  that Dynamo must produce and sell each month to break even  The graphs 24  Financial Paper Inc  is a printer of checks and forms for for a certain financial institutions  For individual accounts, boxes answer the of 200 checks cost $0 80 per box to print and package and sell for $4 95 each  Financial Paper's monthly fixedCost Curves NAME Introduction  Here you continue to work on cost functions  Total cost can be divided into fixed cost, the part that doesn't change as output changes, and variable cost  To get the average (total) cost, average fixed cost, and average variable cost, just divide the appropriate cost function by y, the level of output  The marginal cost function is the derivative of the total cost function with respect to output or the rate of increase in cost as output increases, if you don't know calculus  Remember that the marginal cost curve intersects both the average cost curve and the average variable cost curve at their minimum points  So to find the minimum point on the average cost curve, you simply set marginal cost equal to average cost and similarly for the minimum of average variable cost  Example  A firm has the total cost function C(y)   100   10y  Let us find the equations for its various cost curves  Total fixed costs are 100, so the equation of the average fixed cost curve is 100 y  Total variable costs are 10y, so average variable costs are 10y y   10 for all y  Marginal cost is 10 for all y  Average total costs are (100   10y) y   10   10 y  Notice that for this firm, average total cost decreases as y increases  Notice also that marginal cost is less than average total cost for all y  22 1 (0) Mr  Otto Carr, owner of Otto's Autos, sells cars  Otto buys butes for $c each and has no other costs  What if he (a) What is his total cost if he sells 10 cars  Write down the equation for Otto's total costs sells 20 cars  assuming he sells y cars  TC(y)   For every (b) What is Otto's average cost function  AC(y)   additional auto Otto sells, by how much do his costs increase  Write down Otto's marginal cost function  MC(y)    (c) In the graph below draw Otto's average and marginal cost curves if c   20 Cost Curves NAME Introduction  Here you continue to work on cost functions  Total cost can be divided into fixed cost, the part that doesn't change as output changes, and variable cost  To get the average (total) cost, average fixed cost, and average variable cost, just divide the appropriate cost function by y, the level of output  The marginal cost function is the derivative of the total cost function with respect to output or the rate of increase in cost as output increases, if you don't know calculus  Remember that the marginal cost curve intersects both the average cost curve and the average variable cost curve at their minimum points  So to find the minimum point on the average cost curve, you simply set marginal cost equal to average cost and similarly for the minimum of average variable cost  Example  A firm has the total cost function C(y)   100   10y  Let us find the equations for its various cost curves  Total fixed costs are 100, so the equation of the average fixed cost curve is 100 y  Total variable costs are 10y, so average variable costs are 10y y   10 for all y  Marginal cost is 10 for all y  Average total costs are (100   10y) y   10   10 y  Notice that for this firm, average total cost decreases as y increases  Notice also that marginal cost is less than average total cost for all y  22 1 (0) Mr  Otto Carr, owner of Otto's Autos, sells cars  Otto buys butes for $c each and has no other costs  What if he (a) What is his total cost if he sells 10 cars  Write down the equation for Otto's total costs sells 20 cars  assuming he sells y cars  TC(y)   For every (b) What is Otto's average cost function  AC(y)   additional auto Otto sells, by how much do his costs increase  Write down Otto's marginal cost function  MC(y)    (c) In the graph below draw Otto's average and marginal cost curves if c   20 14  At the current steady state capital labor ratio, assume that the steady state level of per capita consumption, (C N) , is less than the golden rule level of steady state per capita consumption  Given this information, we can be certain that A) an increase in the saving rate will cause an increase in the steady state level of per capita consumption ( (C N )  ) B) a reduction in the capital labor ratio will cause a reduction in (C N)  C) the capital labor ratio will tend to increase over time  D) the capital labor ratio will tend to decrease over time  E) a reduction in the saving rate will have an ambiguous effect on (C N)   Answer  15  In the absence of technological progress, which of the following is true when the economy is operating at the steady state  A) the growth of output per worker is zero  B) the growth of output per worker is equal to the saving rate  () the growth of output per worker is equal to the rate of investment D) the growth of output per worker is equal to the rate of depreciation  E) none of the above Answer  16  Which of the following represents a dimension of technological progress  A) larger quantities of output for given quantities of capital and labor Bj better products C) a larger variety of products D) new products Ey all of the above Answer  17  When the production function is represented by Y   NA, labor productivity is represented by which of the following expressions  A)VA BINA CAY D) YA Ey none of the above Answer  18, If the nominal interest rate 8  and expected inflation 3 , the expected real interest rate in year t is approximately A)2  D) 8   Answer Part A  Cercle the choice that best describes the statement  (4 points) ilibrium  refers to the situation when the consumer is getting 2 of 5 utility out of spending a given budget on various goods  inal utility out of spending a given budget on various goods  utility values from each product consumed  D  equal total utility values from each product consumed  2  Assume that a consumer purchases a combination of products Y and Z and that the MUWPy   50 and MUZ P    32  To maximize utility, without spending more money, the consumer should A  purchase less of Y and more of Z B  purchase more of Y and less of Z  C  purchase more of both Y and Z  D  make no change in the quantities Y and Z  E  none of the above 3  If the short run average variable cost of production for a firm is decreasing, then it follows that A  average variable cost must be above average fixed cost  B  marginal cost must be below average variable cost  C  average fixed cost must be constant  D  marginal cost must be decreasing  4  Let assume that a production function is Q   L K where L is labor, and K is capital  Then, if we multiply output by 4 will result to multiply all resources by 4  That means 40  4 L  K  Which of the following is correct  A  there are increasing returns to scale  B  the long run average total cost curve is flat  C  the law of diminishing returns is proven wrong  D  the example is for the short run rather than the long run  E  none of the above Problem 1  (4 points) A consumer's utility function is U   10X Y  The price of good X is Pi   $10 and the price of good Y is Py   $5  His income is M   $150 and his MRSxy   Lar What is his optimal consumption bundle  Show this bundle in a graph  ANSWER ABOVE THE PREVIOUS LINE IS NOT GRADED

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37. This question is a sequel to Question 35 from Problem Set #9. So you don't have to look it up, the following table shows

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