Week 4 – Check Your Understanding
Chapter 7:
1. From the apprehension of the relationships natant the several genesis capacitys, finished the subjoined table: (3 points)
Variable Input L  Sum Result TPL (=Q)  Mediocre Result APL  Ultimate Result MPL 
0  0  na  na 
1 

 16 
2  56 


3 
 36 

4 

 52 
5 
 40 

6  216 


7 

 20 
Herd Magnitude  Mix of Fish Caught Per Week (Hundreds of Pounds) 
2  18 
3  25.5 
4  32 
5  37.5 
6  42 
7  45.5 
8  48 
9  49.5 
10  50 
11  49.5 
12  48 
13  45.5 
2. The mix of fish caught per week on a trawler is a capacity of the herd magnitude assigned to haveeffect the boat. Based on goneby axioms, the subjoined genesis list was developed: (3 points)
Over what collocate of workers are there:
a. Increasing ultimate profits _______________________
b. Decreasing ultimate profits _______________________
c. Negative ultimate profits ________________________
3. Suppose the firm’s genesis capacity is consecrated by the subjoined relationship:
Q = 5 L ^{0.8} K ^{0.2}
Where the exponents of L (labor) and K (capital) are interpreted as the urban input elasticities of strive and cardinal, respectively.
a. Determine the percentage extension in output (Q) if strive (L) is extensiond by 10 % period cardinal is held continuous.
b. Determine the percentage extension in output (Q) if cardinal (K) is extensiond by 20 % period strive is held continuous.
c. Determine the percentage extension in output (Q) if twain strive (L) and cardinal (K) are extensiond by 20 %.
4. Consider the subjoined Cobb Douglas Genesis capacity restraint the fellowsubject gait scheme in a point city: (3 points)
Q = aL^{b1}F^{b2}K^{b3}
Where L = strive input in worker hours
F= fuel input in gallons
K = cardinal input in mix of fellowsubjectes
Q = output measured in millions of fellowsubject miles
The values of the parameters are: (Hint: See the exposition of the exponents in Question 3.)
a = 0.0024
b1 = 0.50
b2 = 0.30
b3 = 0.15
a. Suppose that the strive input (L) is extensiond by 2% contiguous year (with the other inputs held continuous). Determine the resemble percentage veer in output (Q).
b. Suppose that the cardinal input (K) is decreased by 2% contiguous year (with the other inputs held continuous). Determine the resemble percentage veer in output (Q).
c. What symbol of profits to layer appears to specify this fellowsubject gait scheme? (Hint: gather the exponents up. If the mix exceeds 1, there is increasing profits to layer, if it is short than 1, there is decreasing profits to layer, and if it correspondents 1, there is continuous profits to layer.)
Chapter 8:
1. A regular genesis scheme employs barely strive (L). Output (Q) is a capacity of strive consecrated by the subjoined relationship: (3 points)
Where MPL = 1200L – 300L^{2}


(a)  Determine the mediocre result capacity restraint input L.

(b)  Find the mix of units of input L that maximizes the sum result capacity. (Hint: determined MPL correspondent to cipher and unfold restraint L.)

(c)  Find the mix of units of input L that maximizes the mediocre result capacity. (Hint: determined MPL correspondent to the APL equation ground in divorce “a” and unfold restraint L.) 


2. During the ultimate scant days the Superior Company has been popular into problems with its computer scheme. The ultimate reach of the genesis consume list resulted in the infinished listing shown beneath. From your apprehension of consume speculation, replenish in the blanks. (6 points)
Q  TC  TFC  TVC  ATC  AFC  AVC  MC 
0  40 

 na  na  na  na 
1 


 52 



2 

 20 




3 


 21.33 



4 





 4 
5 

 40 




6 


 15.67 



7 




 10 

8 

 96 




9 




 15 

10 





 45 
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