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As a farmer, you work for yourself using your own tractor, equipment, and farm structures. Why might it be difficult to calculate your profits from farming?
Evaluate this business strategy. Will employing relatives really keep profits from falling? Under what conditions is this a good strategy?
Draw a typically shaped total product curve and the marginal product curve derived from it, and indicate the ranges of increasing, diminishing, and negative.
What is the marginal product of the seventh worker? Under these conditions, would you ever choose to employ nine workers?
A one-day ticket to visit the Screaming Coasters theme park costs $36. What is the marginal cost of the second consecutive day?
As a movie exhibitor, you can choose between paying a flat fee of $5,000 to show a movie. Will your choice affect your fixed and variable costs? How?
What is likely to happen to your marginal costs when adding output requires working beyond an eight-hour day, if workers must be paid time-and-a-half wages?
If the elasticity of demand for Giants game tickets is estimated to be -1.6, what would you advise? If the elasticity of demand equals -0.4?
what would be the elasticity of demand if the quantity demanded changed from: a. $19 to $21? b. $27 to $33? c. $195 to $205?
Explain why using the midpoint formula for calculating the elasticity of demand gives the same result whether price increases or decreases.
Why is a more narrowly defined good (pizza) likely to have a greater elasticity of demand than a more broadly defined good (food)?
The Cowtown Hotel is the only first-class hotel in Fort Worth. What do you think the advisors replied? Why would they suggest increasing prices?
A movie production company faces a linear demand curve. At what level should the price be set? Where is demand elastic, inelastic, or unit elastic? Explain.
Isabella always spends $50 on red roses each month and simply adjusts the quantity. What can you say about Isabella's elasticity of demand for roses?
If taxi fares in a city rise, what will happen to the total revenue received by taxi. What will happen to the total revenue earned by the subway as a result?
Mayor George Henry has a problem. He doesn't want to anger voters by taxing them. In which case would the tax burden fall primarily on producers?
Using the midpoint formula for calculating the elasticity of supply, if the price of a good rose from $95 to $105, what would be the elasticity of supply?
Why is an increase in price more likely to decrease the total revenue of a seller in the long run than in the short run?
how does the incidence of a tax change from the short run to long run as a result? What happens to revenue raised from a given tax over time, ceteris paribus?
Calculate the income elasticity of demand for intercity rail travel. Calculate the cross-price elasticity of demand for intercity rail travel.
If demand for apples increased as a result of a news story that highlighted the health benefits of two apples a day, what would happen to producer surplus?
Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and output.
How is total surplus related to the efficient level of output? Using a supply and demand curve, demonstrate that producing less than the equilibrium output.
If the government imposes a price ceiling of $800 on this market, predict the size of the resulting apartment shortage.
What is the law of diminishing returns? What is the crucial assumption behind this law? Does the law hold in the long-run? Why or why not?