1) For each of the following changes, show the effect on the supply curve and state what will happen to market equilibrium price and quantity in the short run.
a. The government requires pollution control filters that raise costs on goods.
b. Wages of workers in this industry fall.
c. There is an improvement in technology.
d. The price of the good falls.
e. Producers expect that the price of the good will fall in the future.
The following questions refer to this regression equation. (Standard errors in parentheses.)
QD = 15,000 - 10 P + 1500 A + 4 Px + 2 I
Q = Quantity demanded
P = Price = 7,000
A = Advertising expense, in thousands = 54
PX = price of competitor's good = 8,000
I = average monthly income = 4,000
2) Calculate the elasticity for each variable and briefly comment on what information this gives you in each case.
3) The table above shows the weekly relationship between output and number of workers for a factory with a fixed size of plant.
a. Calculate the marginal product of labor.
b. At what point does diminishing returns set in?
c. Calculate the average product of labor.
d. Find the three stages of production.