Economics 310 Second Exam Spring 2004 Professor Kenneth Ng COBAE California State University, Northridge.

Slides:



Advertisements
Similar presentations
Top 10 Most Common Errors AP Economics
Advertisements

Prices and Output decisions for
1. If the monopolist depicted in the graph produces at the profit-maximizing output, what will be the firm’s economic profit? Explain. 2. Lightly shade.
Unit 3.2 Perfect Competition Review. $ Cost and Revenue MC AVC ATC 14 Should the firm produce? What output should the firm produce? What is.
Economics 310 Price Theory Second Exam-Spring 2001 Department of Economics College of Business and Economics California State University-Northridge Professor.
Ch. 11: Perfect Competition.  Explain how price and output are determined in perfect competition  Explain why firms sometimes shut down temporarily and.
Ch. 11: Perfect Competition.  Explain how price and output are determined in perfect competition  Explain why firms sometimes shut down temporarily and.
Next Week Complete Homework 8 on Homework advantage by Sunday, October 1 at 11:55 pm. Read Chapter 9, Perfect Competition and the Supply Curve.
Chapter 10: Perfect competition
Multiple Input Cost Relationships
AP Economics December 8, Review Unit 3 Exam: Theory of the Firm 2.Begin Unit 4: Factor Markets 3.Unit 4 Exam NEW DATE: Monday, December 22 and Tuesday,
Chapter 28: The Labor Market: Demand, Supply and Outsourcing
Types of Market Structure
Chapter 23 – Perfect Competition Homework – Day 1 Read pages 413 – 423. Stop at "Marginal Cost and Short-Run Supply.” On your own paper in your notebook,
Long Run Market Supply is Horizontal (p. 306) Entry and Exit will end when P=MC at min. of ATC = Long Run Equilibrium (Efficient Scale) Only one price.
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Supply Decisions.
Supply Decisions Chapter 5 Copyright © 2011 by The McGraw-Hill Companies, Inc. All Rights Reserved.McGraw-Hill/Irwin.
Discussion Session 4 - Review 07/15/2015. Supply and Demand through a Labor Lens In the labor market, demand comes from firms who “consume” labor to produce.
Perfect Competition *MADE BY RACHEL STAND* :). I. Perfect Competition: A Model A. Basic Definitions 1. Perfect Competition: a model of the market based.
And Unit 3 – Theory of the FirmPart Many buyers and sellers 2. All the products are homogeneous. 3. All buyers & sellers are price takers. 4. There.
Top 10 Most Common Errors AP Economics Overview of Trouble Spots 10. Monopolistic Competition and Economies of Scale 9. A Tax Reduces Allocative.
Micro Ch 21 Presentation 2. Profit Maximization in the SR Because the purely competitive firm is a price taker, it can maximize its economic profit/minimize.
Next page Chapter 5: The Demand for Labor. Jump to first page 1. Derived Demand for Labor.
Click to begin. Click here for Final Jeopardy Basic Economic Concepts Supply and Demand Imperfect Competition Resource Market Failures 10 Point 20 Points.
Eco 6351 Economics for Managers Chapter 6. Competition Prof. Vera Adamchik.
Economies of Scale Chapter 13 completion. The Shape of Cost Curves Quantity of Output Costs $ MC ATC AVC AFC.
Economics 311 Money and Income
Unit 3: Costs of Production and Perfect Competition
Second Exam Economics 310 Fall 2000 Professor Kenneth Ng COBAE
Economics 375 Economic Growth Exam Fall 2001 Professor Kenneth Ng California State University, Northridge.
Perfect Competition 1. Market Structure Continuum Pure Competition Pure Monopoly Monopolistic Competition Oligopoly FOUR MARKET MODELS Characteristics.
Chapter 10 – Perfect Competition Homework – Day 1 Read pages 220 – 230. Stop at "Marginal Cost and Short-Run Supply.” On your own paper in your notebook,
Economics 311 Money and Income First Exam-Spring 2001 Department of Economics College of Business and Economics California State University-Northridge.
 Many small firms  Standardized product  No need to advertise  “Price takers”  Free entry and exit  Perfectly elastic demand  Average revenue.
1 Chapter 8 Practice Quiz Perfect Competition A perfectly competitive market is not characterized by a. many small firms. b. a great variety of.
Individual Firm Quantity (firm) 0 Price Entire Market Quantity (market) Price 0 DDemand, 1 SShort-run supply, 1 P 1 ATC P 1 1 Q A MC AVC In a Competitive.
Review pages Explain what it means to say that the monopolist is a “price maker.” 2. Explain the relationship between output and price for.
Mr. Bammel. Very Large Numbers: independently acting sellers often at national levels of market; Standardized Product: Identical (consumers are indifferent.
Economics 311 Money and Income Second Exam-Spring 2002 Department of Economics College of Business and Economics California State University-Northridge.
Economics 310 Price Theory Chapters 5 and 6-Pop Quiz. Department of Economics College of Business and Economics California State University-Northridge.
Economics 2010 Lecture 12 Competition (II). Competition  Output, Price, and Profit in the Short Run  Output, Price, and Profit in the Long Run  Changing.
Microeconomics ECON 2302 Spring 2010 Marilyn Spencer, Ph.D. Professor of Economics Review: Chapters 6, 10, 11 & 12.
1995 Microeconomics Question 1.
Perfect (or pure) Competition
Review Difference between fixed and variable resources
Graphing Perfect Competition
Review Identify the 4 market structures.
Economics, Markets and Organizations (Tutorial 3)
Monopoly versus Perfect Competition
Cost Curves & Competitive Markets Test
Monopoly.
#1 MC MR=D=AR= P ATC AVC Q $ Should the firm produce?
Main Topics for Free Responses Since 1995
Perfect Competition.
Unit 3: Costs of Production and Perfect Competition
AP Microeconomics 2004 Question 3.
Perfect Competition part II
Graphing Perfect Competition
Microeconomics Question #2.
Economics 101 – Section 5 Lecture #19 – Tuesday, March 30, 2004
Perfect Competition part II
Graphing Perfect Competition
Graphing Perfect Competition
8/9b - ARE BUSINESSES EFFICIENT? Pure Competition in the Long Run
PURE CompetITion.
4 Market Structures Candy Markets Simulation.
Perfect Competition part III
Chapter 10: Perfect competition
AP Microeconomics 2004 Question 3.
Elasticity and Its Application
Presentation transcript:

Economics 310 Second Exam Spring 2004 Professor Kenneth Ng COBAE California State University, Northridge

Question 1 Question 1 (40 points)Consider the firm depicted on the next page which is producing 100,000 units of output domestically using 4,000 workers at a total cost of $100,000 at point A. 1.If the cost of labor in the U.S. is $20 per unit and the cost of capital is $100, how many units of capital is the firm using. Place you answer and your calculations in the box below and label all relevant values on your graph. $100,000=(4000*$20)=(X*$100) X=20,000/100=200 units of capital 2.Suppose the firm outsourced production to India where labor costs are only $5 per unit. Depict the short and long run effects of outsourcing on your graph. 3.What effect will outsourcing have on the capital/labor ratio? Will the number of jobs in the world, India and the U.S. combined increase of decrease? Depict on your graph and explain what is happening in the box below. 4.Compute the ATC after outsourcing or if it cannot be computed explain why. Put your computations or explanation in the box below. The ATC after outsourcing cannot be computed because the information necessary to compute the combination of capital and labor used is not available.

100,000 Labor Capital A 4, $100,000 5,000 20,000 After outsourcing the price of labor has fallen so the iso-cost and iso-output curves at (200,4,000) are no longer tangent so the firm is no longer producing efficiently. The firm is using too much capital and not enough labor. The firm can either cost minimize and move to point B where they are producing the same output with a lower total cost or output maximize by moving to C where they are producing more output with the same total cost. In either case, the capital/labor ratio will decrease C B

Question 2 Question 2 (60 points). Consider the firm which outsources from question (1). Draw their unit cost curves on the graphs before and after outsourcing on the next page assuming that the market clearing price is P1 before any outsourcing occurs. 1.Draw the unit cost curves for a second firm which refuses to outsource on the appropriate graph. 2.If the prevailing market price of the good is P1 depict the quantity produced by each firm and it’s profit or loss. 3.Use the market supply and demand curves below show the short and long run effects of outsourcing. What will happen to the number of firms, market output, firm output, short and long run profits, and the number of firms that outsource. 4.Carryover the effects from your market supply and demand curves onto the unit cost curves of the firms and show the effects of outsourcing on both firms profits and output decision. 5.Discuss the winners and losers from outsourcing in the box below.

Output Firm which outsources Firm which doesn’t outsource P1P1 MC ATC MC ATC MC ATC

S After long run entry/exit Price Q Demand S Ralphs, Albertson’s, and Vons P1P1 S After increasing wages P2P2 P3P3 The short and long term effects of outsourcing.

Curve Without HomeworkWith Homework Mean Standard Deviation Students Taking Exam74 GradeRequired Score Normalized Score Number Receiving Grade Percent Receiving Grade A % B % C % D % F 2432%

Administrative Details One Week Mandatory Cooling Off Period.  Nothing concerning the exam, homework, scoring etc. will be discussed until next Monday