1. Chapter 9 Supplemental Questions

2. Units of Variable Input
Question 1.
Units of Variable Input
Price/Unit
Total Cost of Input
Marginal Input Cost 1 2
2.5 3 5
4.5 8 6
A. Calculate the total input cost and the marginal input cost.
B. If the marginal value or marginal revenue products were 4, what would be the profit maximizing level of input?

3. Quantity per unit of time
Question 2.
A. Find the equilibrium price and quantity for a monopsonist in the graph below.
B. Find the equilibrium price and quantity under perfect competition in the graph below.
C. What is the magnitude of monopsonistic exploitation?
MIC
Quantity per unit of time 8 5 3
$/unit
Supply of Input
MVP or MRP

4. Question 3.
On the following graph, show the effect of a lump-sum tax on a monopolist.
Quantity per unit of time MC
ATC
MR D
$/unit

5. Question 4. Using the graph below, answer questions a through d.
A. What are the profit-maximizing price and quantity levels for the monopolist?
B. Calculate profit.
C. Suppose the government imposes a price ceiling of $40. Now what is the optimal price and quantity combination?
D. Calculate the new level of profit.