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atluriram, Professor
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Experience:  MASTER OF COMMERCE, BACHELOR OF LAWS, COMPANY SECRETARY QUALIFICATIONS
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Microeconomics Quiz 6 Consumer choice, budget constraint 1. The

Customer Question

Microeconomics Quiz 6 Consumer choice, budget constraint


1. The table below shows Jason’s TOTAL utility from consuming various quantities of ice cream sandwiches.

Quantity 0 1 2 3 4
Total Utility 0 10 15 18 ?



a. MARGINAL utility of the third ice cream sandwich is ________.
b. After he has eaten 3 ice cream sandwiches, what would be the possible MARGINAL utility from the 4th ?


2. Use the idea of diminishing marginal utility to explain why stores often use “buy one get one 50% off” pricing strategy.








Microeconomics Quiz 7 Costs of production

1. Ed is a freelance writer who could work for a newspaper at $25,000 a year but instead works for himself and reaps $41,000 a year in sales. His only business expenses are $1,000 for writing materials and $12,000 for renting an office.
a. What is Ed’s accounting profit?


b. What is Ed’s economic profit?



2. Which of the following is most likely to generate fixed cost for Joe's Garage?
a. the grease used to lubricate cars
b. the part-time labor employed to repair cars
c. the inventory of replacement parts
d. the electricity used to heat and light the garage
e. the garage space used to repair cars

3. Which of the following are possible for a firm in the short run?
a. Halting production
b. Hiring more workers
c. Building a factory
d. Putting idle machines to work


4. Adrian’s Premium Boxing Service subcontracts with a chocolate manufacturer to box premium chocolates for their mail order catalogue business. She rents a small room for $100 a week in the downtown business district that serves as her factory. She can hire workers for $300 a week per worker.

a. Fill in the blacks in the table below. You may use a calculator.

Number of Workers Output (Boxes of Premium Chocolates Produced per Week) Marginal Product of Labor
(MP) Average Product of Labor (AP) Cost of Factory per Week (TFC)
Cost of Labor
(TVC)
Total Cost
(TC) Average Fixed Cost
(AFC)
Average Variable Cost
(AVC) Average
Total Cost
(ATC=
AFC+AVC)

0 0
1 33
2 63
3 78
4 89
5 95

b. Does the production function described in the table exhibit diminishing marginal product of labor? Explain.





c. Average product is at a maximum when _____workers are hired

d. Per unit cost of production (average total cost) is at a minimum when _____workers are hired .

e. During the week of July 4th, Adrian doesn't hire workers and doesn’t box any chocolates. What are her total costs during the week?


5. Davey produces 100 glasses of lemonade with average total cost of 50 cents per glass and average variable cost of 40 cents per glass.
a. What is Davey's total fixed cost?


b. Suppose he decides to increase his production to 120 glasses of lemonade for today, what is his total fixed cost now?



6. When Burger king hires one worker, 15 customers can be served in an hour. When Burger King hires two workers, 40 customers can be served in an hour. What is the marginal product of the second worker?




7. “Too many cooks spoil the broth” implies that the marginal product of the last cook is:
a. Very low.
b. Zero.
c. Negative.
d. Can only tell that the average product is negative, can’t tell about the marginal product.
e. Can’t tell without tasting the broth.

8. How does a large company (for example, Walmart) take advantage of economies of scale?










9. In 2003, Time Warner (owns CNN) and the Walt Disney company (owns ABC News) discussed merging their news operations. After analyzing the situation, the companies decided that a combined news operation would have higher average costs than either CNN or ABC News had separately. Use a long-run average cost curve to illustrate where on the output scale each firm was before the merger, where the joint firm be after the merger, and why this merger did not take place. What is a possible explanation for decreasing returns to scale?



















3. What social factors (things other than our own preferences, budget and prices of goods) may influence our choices?













3. Suppose you spend your budget only on milk and lemonade, which are substitutes. If both are normal goods and the price of milk increases, the quantity of milk will:
a. either increase or decrease
b. the substitution effect suggests more will be purchased, but the income effect suggests less will be purchased
c. the income effect suggests more will be purchased, but the substitution effect suggests less will be purchased
d. both the income and substitution effects suggest that more will be purchased
e. both the income and substitution effects suggest that less will be purchased


5. What type of “irrational” behavior does behavioral economics seek to explain?











6. Suppose you enjoy windsurfing and snorkeling. The table below shows your preferences, the total utility (TU) you get from each activity:

Hours
per day TU from windsurfing MU from
windsurfing TU from snorkeling MU from
snorkeling
1 120 40
2 220 76
3 300 106
4 360 128
5 400 140
6 412 150

a. Fill in the marginal utility (MU) from each additional hour of windsurfing and snorkeling on the table above. Are your preferences consistent with the law of diminishing marginal utility?




b. Suppose you have a daily budget of $35 and unlimited leisure time (it’s a dream). Windsurfing is $10/hour and snorkeling is $5/hour. In order to maximize your total utility, how much time would you spend on windsurfing and snorkeling? Show your work. (HINT: use the MU/$ rule)


Windsurfing=_________ Snorkeling =__________

c. Write down your budget constraint. Draw the budget line below.























d. Your daily budget decreases to $20 (recession hits hard). Write down your new budget constraint and show the new budget line on the same graph above.



e. You still have $35 per day to spend, but the price of a snorkeling increased to $10. Write down your new budget constraint and mark the new budget line on the same graph
Submitted: 3 years ago.
Category: Homework
Expert:  atluriram replied 3 years ago.

atluriram :

sir/madam

atluriram :

I have noticed the assignment and will submit the answer within 24 hours

atluriram :

with regards

atluriram :

atluri ramesh

Customer:

ok thank you

Customer:

will try again later

Customer:

hello are u there

Customer:

i am not aware how this work

atluriram :

sir/madam

atluriram :

I herewith submit the work. You can download

atluriram :

with regards

atluriram :

atluri ramesh

atluriram :

sir/madam

atluriram :

sorry, mistakenly I submitted old file. You can use this file

atluriram :

with regars

atluriram :

atluri ramesh

Customer:

hello are u there

atluriram :

sir/madam

atluriram :

tell me

Customer:

good morning

atluriram :

very nice to talk with you

Customer:

i am actually trying to open file

atluriram :

still you could not?

atluriram :

if so, you can use the following link

atluriram :

http://www.mediafire.com/?ly78h3l85am2say

Customer:

i really appreciate all of your assistance

atluriram :

Happy for your comment which boosts to deliver more quality of work

Customer:

i have three more quizzes are you intersted

atluriram :

Sure and wait and also mention approximate deadline. Please post the assignment adding my username i.e. atluriram before firstline of assignment

atluriram :

with regards

atluriram :

atluri ramesh

Customer:

are u there

atluriram :

yes

Customer:

i am going to post it but the deadline is by monday

atluriram :

sure, please continue

Customer:

i cannot post it here as an attachment

atluriram :

you have to post as new assignment (not here) - as new question

Customer:

ok no probs will do now. can u tell me how to do budget lines

Customer:

so i can answer the last question

Customer:

on this quiz

atluriram :

It is up to you, I cannot discuss about budget, whatever it may be , no problem

atluriram :

with regards

atluriram :

atluri ramesh

atluriram :

In this regard, you can discuss with JA customer support

Customer:

hey i just posten a new question i put your name on first line i did it correct

atluriram, Professor
Category: Homework
Satisfied Customers: 533
Experience: MASTER OF COMMERCE, BACHELOR OF LAWS, COMPANY SECRETARY QUALIFICATIONS
atluriram and 2 other Homework Specialists are ready to help you
Expert:  atluriram replied 3 years ago.
sir/madam

Yes, now I seen the question/assignment. It is correct procedure

with regards
atluri ramesh

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