Question

17. The market is perfectly competitive and your business is considered to be profit maximizing. Your business earns economic profits of $1500. The foxed costs of your business decrease from $500 to $450. This means your business will b C a reduce its output raise is price eam a greater profil d. earn a smalier profit 18. Sebastian has the choice of working as a grocery store stocker ($12/hour) or washing windows for local businesses ($4 per window). He doesn't really care which of these jobs he works at. The number of windows washed depends on the number of hours he spends on the task. The table below shows his window cleaning productivity Hours per day cleaning windows Total number of windows cleaned Sebastian decides he will spend his time cleaning windows If he works three hours at this task how much will his marginal revenue be? a b c d. $4 $16 $12 $14 19. In the graph below, correctly identify each of the curves for a perfectly competitive business. If the product sells for $10/bushel and the owner produces at the profit maximizing quantity, then the amount produced will be: 10 20 30 40 5 0 60 a 50 bushels b. 20 bushels c. 30 bushels d. zero bushels 20. Your favorite aunt is going on vacation. She has requested you care for her cat while she is gone. She has also agreed to pay you for doing this. Since she lives next door to you there is no travel time involved. You estimate it will take approximately 30 minutes a day to clean the litter box, feed the cat and provide some play time. You earn $12/hour at your job and work nine hours a day. The minimum amount you would expect to get paid to look after the cat would be a $6 per day, because that is your opportunity cost of a half hour of work b. 518 per day, because overtime wages are generally 1.5 times your regular wage when you work more than eight hours a day c. zero, because your regular job is not available for more than nine hours per day. d the value of a half hour of leisure, which is greater than zero.

Answer 1

17. Answer: Economic profit includes fixed cost also, so decrease in fixed cost will cause increase in profit.

Hence, Answer is option (C) earn greater profit.

18.Answer

House per day cleaning window	Total no of window cleaned	Total revenue	Marginal revenue
	0	0	0
1	7	28	28
2	11	44	16
3	14	56	12
4	16	64	8
5	17	68	4

If he works 3 hours then marginal revenue is $12. Hence answer is option (C)

18. Answer : Amount produced will be 50 bushels because this is the equilibrium point as per graph.

Hence answer is option (A)

19. Answer :He is getting $12 /hour. So he should get $6 for 30 minutes.

Hence answer is option (A)