| Units of resource |
Total Output |
Price |
Resource Price |
MPP |
TR |
MR |
MRP |
| 1 |
10 |
$ 5 |
$ 10 |
|
50 |
|
|
| 2 |
25 |
$ 5 |
$ 10 |
15 |
125 |
5 |
75 |
| 3 |
35 |
$ 5 |
$ 10 |
10 |
175 |
5 |
50 |
| 4 |
40 |
$ 5 |
$ 10 |
5 |
200 |
5 |
25 |
| 5 |
40 |
$ 5 |
$ 10 |
0 |
200 |
#DIV/0! |
|
Question 1: Calculate the marginal revenue product (MRP = MPP * MR)
Question 2: Using the data in A, determine how many units of resources the firm will want to acquire.
Question 3: Suppose the output price falls from $5 to $4 to $3 to $1 in exercise A. How would that change your answers to exercises A and B?
Question 4: Using the data in A, calculate the marginal factor cost.
Question 5: Suppose the resource price rises from $10 to $12 to $14 to $18 to $20 as resource units go from 1 to 5. How would that change your answer to exercise D? How would it change your answer to exercise B?