Answer the next question on the basis of the following output data for a firm. A

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Answer the next question on the basis of the following output data for a firm. Assume that the amounts of all non-labor resources are fixed. Refer to the below data. Diminishing marginal returns become evident with the addition of the sixth worker. fourth worker. third worker. first worker What is the price elasticity of demand at the point w here total revenue is maximized 0 -infinity infinity -1 -100 Suppose the price elasticity coefficients of demand are 1.43, 0.67, 1.11, and 0.2 products W. X, Y, and Z respectively. A 1 percent decrease in price will decrease revenue in the case(s) of: W and Y. Y and Z. X and Z. Z and W. Suppose that a firm produces 100,000 units a year and sells them all for $5 explicit costs of production are $350,000 and the implicit costs of production $100,000. The firm has an accounting profit of $200,000 and an economic profit of $25,000 $125,000 and an economic profit of $75,000 $100,000 and an economic profit of $50,000 $150,000 and an economic profit of $50,000

Explanation / Answer

13. C. AT THIRD WORKER WHERE THE MARGINAL OUTPUT STARTS TO DECREASE IN PLACE OF INCREASING.

14. D -1 AT THE POINT OF UNITARY ELASTICITY THE TOTAL REVENUE IS MAXIMIZED.

15. A W AND Y BECAUSE THEY HAVE A MORE THAN UNITARY PRICE ELASTICITY.

16. ACCOUNTING PROFIT IS TOTAL REVENUE LESS EXPLICIT COST AND ECONOMIC PROFIT IS TOTAL REVENUE LESS ALL COSTS.

D . 100000*5 = 500000 - 350000 = 150000 ACCOUNTING PROFIT.

100000 * 5 = 500000 -350000 - 50000 = 50000 ECONOMIC PROFIT

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