ECON 710 Final: ECON 710 UW Madison Final Exam 2007
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4. Complete the following cost schedules: | ||||
Quantity | TC | ATC | MC | |
0 | 9 | xxx | xxx | |
1 | 12 | 12 | 3 | |
2 | 16 | 8 | 4 | |
3 | 21 | 7 | 5 | |
4 | 30 | 7.5 | 9 | |
5 | 40 | 8 | 10 | |
6 | 52 | 8.66 | 12 | |
7 | 66 | 9.42 | 14 |
Assuming the price of this product is $10, at what output rate is | |||||
( a ) Total revenue maximized? | |||||
Total revenue is maximized at 7 units | |||||
( b ) ATC minimized? | |||||
( c ) Profit per unit maximized? | |||||
Profit per unit is maximized at 3 units | |||||
( d ) Total profit maximized? | |||||
Total profit is maximized at 4 & 5 units |
when is ATC minimized?
Suppose that the marginal product tripled while product price fell by one-half in the table below.
Units of Resource | Total Product (Output) | Marginal Product (MP) | Product Price (in $) | Total Revenue | Marginal Revenue Product (MRP) in $ |
0 | 0 | 0 | 2 | 0 | 0 |
1 | 7 | 7 | 2 | 14 | 14 |
2 | 13 | 6 | 2 | 26 | 12 |
3 | 18 | 5 | 2 | 36 | 10 |
4 | 22 | 4 | 2 | 44 | 8 |
5 | 25 | 3 | 2 | 50 | 6 |
6 | 27 | 2 | 2 | 54 | 4 |
7 | 28 | 1 | 2 | 56 | 2 |
What would be the new values in the table?
Based on the three individual demand schedules below, and assuming these three people are the only ones in the society, determine the collective demand schedule on the assumption that the good is a public good. Responses go in the Amount society is willing to pay sections.
Individual 1 Individual 2 Individual 3 Public Demand
Price | Qd | Price | Qd | Price | Qd | Amount society is willing to pay | Qd |
$8 | 1 | $8 | 0 | $8 | 1 | ? | 1 |
7 | 2 | 7 | 0 | 7 | 2 | ? | 2 |
6 | 3 | 6 | 0 | 6 | 3 | ? | 3 |
5 | 4 | 5 | 1 | 5 | 4 | ? | 4 |
4 | 5 | 4 | 2 | 4 | 5 | ? | 5 |
3 | 6 | 3 | 3 | 3 | 6 | ? | 6 |
2 | 7 | 2 | 4 | 2 | 7 | ? | 7 |
1 | 8 | 1 | 5 | 1 | 8 | ? | 8 |
Use the public demand schedule above and the following supply schedule to ascertain the optimal quantity of this public good.
Price | Quantity Supplied |
$22 | 10 |
21 | 8 |
20 | 6 |
19 | 4 |
18 | 2 |
17 | 0 |
Instructions: Enter your answer as a whole number.
Optimal quantity = ______?