微观经济学作业答案3doc.docx
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微观经济学作业答案3doc
ManagerialEconomics
HOMEWORKSET#3
Name:
Class:
Student#:
（Dueday:
Nextclass）
Part1:
1.Whentheaverageproductisdecreasing,marginalproduct
a.equalsaverageproduct.
b.isincreasing.
c.exceedsaverageproduct.
d.isdecreasing.
e.islessthanaverageproduct.
Choose:
e）
Thenexttwoquestionsrefertoafirminaconstant-costindustrywithATC（q）=2,000/q+100+5qandMC（q）=100+10q.
2.Thelong-runequilibriumpriceequals:
a.$100b.$200c.$300d.$500e.Noneoftheaboveiscorrect.
Choose:
c）FindminimumATCbysettingATC=MC;thisyieldsq=20.Plugq=20intoATCtofindthelong-runequilibriumpriceof$300.
3.Demandforindustryoutputhasjustincreased.Ifthemarketpriceinitiallyrisesto$600,eachfirminthelongrunwillproduce:
a.20unitsb.50units.c.88.7unitd.100units.
e.Moreinformationisneeded.
Choose:
a）Thelong-runequilibriumwillagainhaveeachfirmproducingatminimumATC.Eachfirmproduces20units,asinQuestion3.
4.Astraight-lineisoquant
a.isimpossible.
b.wouldindicatethatthefirmcouldswitchfromoneoutputtoanothercostlessly.
c.wouldindicatethatthefirmcouldnotswitchfromoneoutputtoanother.
d.wouldindicatethatcapitalandlaborcannotbesubstitutedforeachotherinproduction.
e.wouldindicatethatcapitalandlaborareperfectsubstitutesinproduction.
Choose:
e）
5.AfarmerusesMunitsofmachineryandLhoursoflabortoproduceCtonsofcorn,withthefollowingproductionfunctionC=L0.5+M0.75.Thisproductionfunctionexhibits
a.decreasingreturnstoscaleforalloutputlevels
b.constantreturnstoscaleforalloutputlevels
c.increasingreturnstoscaleforalloutputlevels
d.noclearpatternofreturnstoscale
Choose:
b）2L0.5+2M0.75=2C
6.Thedifferencebetweentheeconomicandaccountingcostsofafirmare
a.theaccountant'sfees
b.thecorporatetaxesonprofits
c.theopportunitycostsofthefactorsofproductionthatthefirmowns
d.thesunkcostsincurredbythefirm
e.theexplicitcostsofthefirm
Choose:
c）
7.Priceceilingareinefficientbecause:
a.bothproducersandconsumerslose.
b.Producerslose,consumersmaygainorlose,butalossoccursonnet.
c.Producerslose,consumergain,butalossoccursonnet.
d.Producersandconsumermaygainorlose,butalossoccursonnet.
e.Noneoftheaboveiscorrect.
Choose:
b）Consumersgainfromalowerprice,butlosebecausetheyareabletobuyless.Producesclearlylosefromtheregulatedprice.Thereisalwaysawelfarelossfrompriceceilings（assumingthatthepriceceilingisbinding）.
8.Assumethatafirmspends$500ontwoinputs,labor（graphedonthehorizontalaxis）andcapital（graphedontheverticalaxis）.Ifthewagerateis$20perhourandtherentalcostofcapitalis$25perhour,theslopeoftheisocostcurvewillbe
a.500.
b.25/500.
c.4/5.
d.25/20or1/4.
Choose:
c）20L+25C=500,C=-4/5L+20
9.Supposethatthepriceoflabor（）is$10andthepriceofcapital（）is$20.Whatistheequationoftheisocostlinecorrespondingtoatotalcostof$100?
a.PL+20PK
b.100=10L+20K
c.100=30（L+K）
d.
e.noneoftheabove
Choose:
b）
ThenextthreequestionsrefertothealfalfamarketdescribedinFigure1.
Price（$/ton）
F
Figure1
10.Ifthegovernmentpurchasesenoughalfalfatoraisethepricefrom$50/tonto$75/ton,thecostoftheprogramwillbe:
a.$100million.b.$225million.
c.$315million.d.$675million.
e.Noneoftheaboveiscorrect.
Choose:
d）Thegovernmentpays$75/tonforthesurplusof25–16=9milliontons:
75（9）=$675.
11.Ifthegovernmentraisesthepriceto$75/ton,producersurpluswillincreaseby:
a.$400million.b.$500million.
c.$562.5million.d.$1,875million.
e.Noneoftheaboveiscorrect.
Choose:
c）ProducersurplusincreasebytheareaofthetrapezoidbetweenP=$50andP=$75,andQ=20andQ=25million:
$25（20+25）/2=$562.5million.
12.Supposethegovernmentdecidestosupportapriceof$75/tonbypayingproducersnottoproducetheexcesssupplyofalfalfa（whichis25–16=9milliontons）.Theminimumcostofthisprogramwillbe:
a.$157.5million.b.$202.5million.
c.$315million.d.$1,875million.
e.Noneoftheaboveiscorrect.
Choose:
b）Toidleacreage,producersmustbepaidatleasttheshadedareainFigure1:
0.5（25–16）（75-30）=$202.5million.
13.Producersurplusinaperfectlycompetitiveindustryis
a.thedifferencebetweenprofitattheprofit-maximizingoutputandprofitattheprofit-minimizingoutput.
b.thedifferencebetweenrevenueandtotalcost.
c.thedifferencebetweenrevenueandvariablecost.
d.thedifferencebetweenrevenueandfixedcost.
e.thesamethingasrevenue.
Choose:
c）
Part2:
Afirm'stotalcostfunctionisgivenbytheequation:
TC=4000+5Q+10Q2.
（1）Writeanexpressionforeachofthefollowingcostconcepts:
a.TotalFixedCost
b.AverageFixedCost
c.TotalVariableCost
d.AverageVariableCost
e.AverageTotalCost
f.MarginalCost
（2）Determinethequantitythatminimizesaveragetotalcost.Demonstratethatthepredictedrelationshipbetweenmarginalcostandaveragecostholds.
Solution:
PART
（1）
a.
b.
c.
d.
e.
f.
PART
（2）
ATCisminimizedwhereMCisequaltoATC.
EquatingMCtoATC
ATCisminimizedat20unitsofoutput.Upto20,ATCfalls,whilebeyond20ATCrises.
MCshouldbelessthanATCforanyquantitylessthan20.
Forexample,letQ=10:
MC=5+20（10）=205
MCisindeedlessthanATCforquantitiessmallerthan20.
MCshouldexceedATCforanyquantitygreaterthan20.
Forexample,letQ=25:
MC=5+20（25）=505
MCisindeedgreaterthanATCforquantitiesgreaterthan20.
Part3:
TheCumminsEngineCo.isasuccessfulproducerofdieselenginesfortrucks.Thispartexaminesthefirm'scostdataandfillintheblanksandthenfindtheprofitmaximizing（orlossminimizing）outputlevelwhenP=$150.Pleaseexplainyourdecision.
Output
q
Revenue
R（$150*q）
TotalCost
TC
Profit
Average
TotalCost
ATC
Average
VariableCost
AVC
MarginalCost
MC
13
2,100
161.54
75
n.a.
14
2,245
160.36
80
145
15
2,400
160.00
85
155
16
2,565
160.31
90
165
17
2,740
161.18
95
175
Answer:
Output
Revenue
TotalCost
Profit
13
1,950
2,100
-150
14
2,100
2,245
-145
15
2,250
2,400
-150
16
2,400
2,565
-165
17
2,550
2,740
-190
Theprofitmaximizingoutputlevelisq=14.Ifitexpandsoutputbyoneunitto15units,itwilltakeinanadditional$150inrevenue,butitwillpayanadditional$155inproductioncosts.So,expandingoutputto15unitswillcausethefirmtoloseanextra$5inprofits.Likewise,ifitreducesitsoutputbyoneunitto13,itsaves$145incosts,butitgivesup$150inrevenue.Thus,profitwouldfallby$5comparedwithproducing14unitsofoutput.Althoughprofitsarenegative（-$145）,itisclearthatlooseswillbeminimizedatq=14.
Part4:
BudOwenoperatesBud'sPackageStoreinasmallcollegetown.Budsellssixpacksofbeerforoffpremisesconsumption.Budhasverylimitedstorespaceandhasdecidedtolimithisproductlinetoonebrandofbeer,choosingtoforegothesnackfoodlinesthatnormallyaccompanyhisbusiness.Bud'sistheonlybeerretailerphysicallylocatedwithinthetownlimits.Hefacesconsiderablecompetition,however,fromsellerslocatedoutsideoftown.Budregardsthemarketashighlycompetitiveandconsidersthecurrent$2.50persixpacksellingpricetobebeyondhiscontrol.Bud'stotalandmarginalcostfunctionsare:
TC=2000+0.0005Q2
MC=0.001Q,
whereQreferstosixpacksperweek.Includedinthefixedcostfigureisa$750perweeksalaryforBud,whichheconsiderstobehisopportunitycost.
a.CalculatetheprofitmaximizingoutputforBud.Whatishisprofit?
Isthisaneconomicprofitoranaccountingprofit?
b.Thetowncouncilhasvotedtoimposeataxof$.50persixpacksoldinthetown,hopingtodiscouragebeerconsumption.WhatimpactwillthetaxhaveonBud?
ShouldBudcontinuetooperate?
WhatimpactwillthetaxhaveonBud'soutoftowncompetitors?
Solution:
a.
Giventhecompetitivenatureofthemarket,BudshouldequatePtoMC.
Sincethecostfunctionisaneconomiccostfunction,wecanconcludethatthisisaneconomicprofit.
b.
Taxshiftstotalcostcurveto:
TC=2000+0.0005Q2+0.5Q
MCbecomes
MC=0.001Q+0.5
settingP=MC
Giventhatthisiszeroeconomicprofit,Budshouldcontinueoperating.
TheimpactuponBud'scompetitorswillbefavorableorneutral.Ashecurtailsoutput,500sixpacksworthofbusinesswilleithershiftelsewhereorchoosetemperance.
Part5:
Themarketforcollegehockeyplayersischaracterizedbythefollowingsupplyanddemandcurves,whereQisthenumberofathletesandPistheweeklywageinexcessoftheirscholarshippayments:
QD=1,600–20P,
QS=-900+30P.
a.Supposethereisacompletelyfreemarket.Whatistheequilibriumweeklywage?
Howmanyathletesarehired?
b.NowsupposethatNationalCollegiateAthleticAssociation（NCAA）stepsinanddecidestocrackdownonpaymentstoplayers.TheNCAAisbotherednotbytheexistenceofthesepayments,butbytheirlevel,sotheNCAArestrictsplayerstobepaidnomorethan$35/weekabovethescholarshippayment.Howmanyathletesarenowhired?
c.Whatisthechangeinproducersurplus（i.e.,theplayers'surplus）asaresultofthepricecontrol?
d.Howmuchdoschoolsnowspendonplayersincomparisontothefreemarketequilibrium?
e.Whatisthedeadweightlossofthepriceceiling?
Answer:
a）S
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