# Micro Economics

Tutorial 5   (dbf105)

1. The diagram beside gives a firm's total product.
a) Explain 3 relationships between TP, MP and AP
d) In the above figure, an inefficient point is ____
b) In the above figure, an unattainable point is _____
c) In the above figure, the most efficient way to produce 10 units is to hire _______.

Quantity of labor(workers) | Total product |
0 |       0 |
1 |   24 |
2 |   50 |
3 |   74 |
4 |   94 |
5 | 110 |
6 | 122 |
7 | 130 |
8 | 134 |
9 | 134 |

2) Ajax Manufacturing has a fixed scale of plant with the levels of total product given in the table for different levels of labor. Complete the table by calculating the average product and marginal product.

3. The table has the total product schedule for an imaginary good called a widget. Each unit of labor costs \$25 and the total cost of capital is \$100.
a)Use this information given to calculate FC, VC TC, AFC , AVC, ATC and MC.
b) Suppose that labor becomes twice as expensive (so that one unit of labor now costs \$50) but nothing else changes. calculate FC, VC TC, AFC , AVC, ATC and MC. If you plotted the cost curves, how would the increased wage rate affect the cost curves?

Quantity of labor(workers) | Total product(widgets per day) |
0 |   0 |
1 |   5 |
2 | 15 |
3 | 35 |
4 | 50 |
5 | 60 |
6 | 65 |

Tutorial 6

1. Pat’s pizza restaurant is a price taker. It has the following total cost schedule.

Output (pizza per hour) |     a) What is Pat’s profit maximizing output and how much profit does Pat make if the market price is
i) \$14 a pizza, ii) \$12 a pizza, and iii) \$10 a pizza.

Total cost (dollars per hour) |
012345 | 102130415469 |

2. Table below refers to a PC firm.

Q | TFC | TVC |       a) Determine the P of the product.
b) Complete the table by calculating TC, AFC, AVC, ATC, MC and MR.
c) If the P were RM80, should the firm continue to operate? Why or why not?
d) If the price were to fall to RM40, should the firm continue to...