ECON: MACRO4 (with CourseMate, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
4th Edition
ISBN: 9781285423623
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 11, Problem 2.9PA
To determine
the assumption of classical economists with regards to the flexibility of wages, prices and interest rates, the implication of self- correcting tendenciesin an economy in case of recession and the disagreements of k’s with classical economists.
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The table below provides the total revenues and costs for a small landscaping company in a recent year.
Total Revenues ($)
250,000
Total Costs ($)
- wages and salaries
100,000
-risk-free return of 2% on owner's capital of $25,000
500
-interest on bank loan
1,000
- cost of supplies
27,000
- depreciation of capital equipment
8,000
- additional wages the owner could have earned in
next best alternative
30,000
-risk premium of 4% on owner's capital of $25,000
1,000
The economic profits for this firm are
○ A. $83,000.
B. $82,500.
OC. $114,000.
OD. $83,500.
○ E. $112,500.
Output TFC ($)
TVC ($)
TC ($)
(Q)
2
100
104
204
3
100
203
303
4
100
300
400
5
100
405
505
6
100
512
612
7
100
621
721
Given the information about short-run costs in the table above, we can conclude that the firm will minimize the average total cost of production when Q = (Round your response to
the nearest whole number.)
The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital. Assume that the wage per unit of labour is $20 and
the cost of the capital is $100.
Labour per unit of time
0
1
Total Output
0
25
T
2
3
4
5
75
137
212
267
The marginal product of labour is at its maximum when the firm changes the amount of labour hired from
○ A. 0 to 1 unit.
○ B. 3 to 4 units.
OC. 2 to 3 units.
OD. 1 to 2 units.
○ E. 4 to 5 units.
Chapter 11 Solutions
ECON: MACRO4 (with CourseMate, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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