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a) Profits are $16,000. Ob) The slope of the isoprofit curve is -0.4. Oc) The marginal rate of substitution is -0.1. d) The markup is 0.1.

a) Profits are $16,000. Ob) The slope of the isoprofit curve is -0.4. Oc) The marginal rate of substitution is -0.1. d) The markup is 0.1.

Microeconomics: Private and Public Choice (MindTap Course List)
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter12: The Supply Of And Demand For Productive Resources
Section: Chapter Questions
Problem 2CQ
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The following diagram depicts a firm's demand curve given the economy-wide demand, and its tangent isoprofit curve. The firm faces a linear demand curve. The workers' average product of labour X equals 1. At B, which of the following statements is correct? Price, p: dollars 80+ W = 60 Iso-profit curve Demand curve Production function: q = n Quantity, q: Employment, n, given a production function where APL = A=1 200 a) Profits are $16,000. b) The slope of the isoprofit curve is -0.4. c) The marginal rate of substitution is -0.1. d) The markup is 0.1.
Transcribed Image Text:The following diagram depicts a firm's demand curve given the economy-wide demand, and its tangent isoprofit curve. The firm faces a linear demand curve. The workers' average product of labour X equals 1. At B, which of the following statements is correct? Price, p: dollars 80+ W = 60 Iso-profit curve Demand curve Production function: q = n Quantity, q: Employment, n, given a production function where APL = A=1 200 a) Profits are $16,000. b) The slope of the isoprofit curve is -0.4. c) The marginal rate of substitution is -0.1. d) The markup is 0.1.
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