How many units will the firm produce in the short-run

Question 1. Use the cost table below to answer the following questions. (Note: You cannot match up price exactly with the appropriate item. Choose the one that comes most nearly.)

Total Total Average

Fixed Variable Total Total Marginal
Quantity Cost Cost Cost Cost Cost
0 \$40 0 40 X X
1 40 55 95 95 55
2 40 75 115 57.50 20
3 40 90 130 43.33 15
4 40 110 150 37.50 20
5 40 135 175 35 25
6 40 170 210 35 35
7 40 220 260 37.14 50
8 40 290 330 41.25 70

a) At a product price of \$72, how many units will this firm produce in the short-run?
b) At a product price of \$52, how many units will this firm produce in the short-run?
c) At a product price of \$28, how many units will this firm produce in the short-run?

Question 2. If demand and supply are given by the following:

DEMAND FOR WHEAT

PRICE OF WHEAT QUANTITY DEMANDED (BUSHELS)
\$ 5 18
4 20
3 24
2 30
1 40

SUPPLY OF WHEAT

PRICE OF WHEAT QUANTITY SUPPLIED (BUSHELS)
\$ 5 36
4 32
3 24
2 14
1 0

a) What will be the equilibrium price?
b) What will be the equilibrium quantity?

Question 3. The following is a straight-line demand curve:

Price Quantity Demanded
\$12 1
10 2
8 3
6 4
4 5

a) Calculate the elasticity of demand in going from 2 unit to 3 units.

b) Is the demand elastic or inelastic in this range?

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