05 Jun Question Assignment 2B (100 marks total)
Question
Assignment 2B (100 marks total)
Assignment 2 should be submitted after you have completed Units 6 through 10 (Chapters 13 to 18). It is worth 10% of your final grade. Insert your answer to each question below the question. Show your calculations. None of the assignment questions require you to provide a graph.
1. The data below show the relationship between number of workers hired and cost and revenue for a small competitive farm in Alberta.
Number of Workers
Price
Wage
Output
Marginal Product of Labour
Value of Marginal Product of Labour
Marginal Profit
0
$10
….
0
1
10
$500
110
2
10
500
190
3
10
500
250
4
10
500
290
5
10
500
310
a. Complete the columns of marginal product of labour, value of marginal product of labour, and marginal profit in the table above. (4.5 marks)
b. If this farm decides to maximize its profit, how many workers will it hire? Explain your answer. (2 marks)
c. Given the results in (b), assume the farm has fixed costs of $100 and labour is the only variable factor. What is the farm’s profit? Show your calculations. (4 marks)
d. At what point do diminishing returns set in for this farm? Explain. (3 marks)
e. If the market price increases from $10 to $13 at the same time that wage increases from $500 to $550, how many workers should be hired? Explain your answer.
(4 marks)
f. Explain why the labour supply curve may not be upward sloping. (This question is not related to the above table.) (5 marks)
1. Suppose that you are an owner of a company that produces a special weight-loss over-the-counter medicine in a monopolistically competitive industry. The demand and the total cost for your medicine per day are given in th
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