Please answer all questions below and show work!!! 1. suppose that installation
ID: 1222949 • Letter: P
Question
Please answer all questions below and show work!!!
1. suppose that installation of a new assembly line increased the output produced per worker. The cost per unit of output:
a. will increase
b. will decrease
c. will be unchanged
2. Scientists have developed a bacterium that they believe will lower the freezing point of tomatoes. This innovation could save farmers $1 billion a year in crops lost to frost damage. If this technology becomes widely used, what will happen to the equilibrium price and quantity for the tomato market?
a. price will decrease, quantity will decrease
b. price will decrease, quantity will increase
c. price will increase, quantity will decrease
d. price will increase, quantity will increase
e. The change in equilibrium price and quantity is indeterminate
Use the graph below to answer question 3:
The graph on the left shows the short-run cost curves for a firm in a perfectly competitive market, and the graph on the right shows the current market conditions in this industry.
3. In order to maximize profit, how much output should the firm produce?
a. 20 units
b. 30 units
c. 50 units
d. 60 units
Two stores that compete for most of the market in a town must choose their advertising levels simultaneously. The following payoff table facing the two firms, smith’s and Dale’s, shows the weekly profit outcomes for the various advertising decision combinations. Use this payoff table to answer the following 2 questions .
Dale’s advertising level
High
Low
Smith’s
advertising level
High
A
$11,000, $6,000
B
$8,000, $7,000
Low
C
$9000, 7,000
D
$7,000, $8,000
4. Smith’s:
a.has a dominant strategy: choose a high level of advertising.
b.has a dominant strategy: choose a low level of advertising.
c.has a dominated strategy: choose a high level of advertising.
d.has a dominated strategy: choose a low level of advertising.
e.both b and c.
f.both a and d.
5. The Nash Equilibrium outcome is:
Cell A
Cell B
Cell C
Cell D
Dale’s advertising level
High
Low
Smith’s
advertising level
High
A
$11,000, $6,000
B
$8,000, $7,000
Low
C
$9000, 7,000
D
$7,000, $8,000
Firm Industry 6 SMC 6 ATC 5 3 3 0 0 20 40 60 80 100 5,000 10,000 Output of the firm Industry outputExplanation / Answer
1.
As there is more production per worker that means higher total production from the same labor quanity, that will reduce the labor cost per unit.
The cost per unit of output will decrease.
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