Is the addition of the third janitor associated with increasing, diminishing, or negative marginal returns? Explain.

COBU 220

Assessment Assignment

Spring 2022

 

1. Suppose you are the manager of a restaurant that serves an average of 400 meals per day at an average price per meal of $20. On the basis of a survey, you have determined that reducing the price of an average meal to $18 would increase the quantity demanded to 450 per day.

 

1. Compute the price elasticity of demand between these two points.

 

 

1. Would you expect total revenues to rise or fall? Explain.

 

16. Suppose you have reduced the average price of a meal to $18 and are considering a further reduction to $16. Another survey shows that the quantity demanded of meals will increase from 450 to 500 per day. Compute the price elasticity of demand between these two point

 

 

1. Would you expect total revenue to rise or fall as a result of this second price reduction? Explain.

 

2. The table below shows how the number of university classrooms cleaned in an evening varies with the number of janitors:

 

Janitors per evening	0	1	2	3	4	5	6	7
Classrooms cleaned per evening	0	3	7	12	16	17	17	16

 

1. What is the marginal product of the second janitor?
3. What is the average product of four janitors?

 

1. Is the addition of the third janitor associated with increasing, diminishing, or
2. Would you expect total revenue to rise or fall as a result of this second price reduction? Explain.
3. ? Explain.

 

1. Is the addition of the fourth janitor associated with increasing, diminishing, or negative marginal returns? Explain.

 

 

 

3. The graph shows the perfect competition market.

 

1. The exhibit shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. The firm will produce _______ units of output per day to maximize profit.

 

 

1. The exhibit shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. The firm’s total revenue per day at maximized profit is:

 

 

 

1. The exhibit shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. The firm’s total cost per day at maximized profit is:

 

 

1. The exhibit shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. The firm’s total profit per day at maximized profit is.