Microsoft Word - Homework 3 - Q - W20 1 ECON202 Winter XXXXXXXXXXName____________________________ Homework 3 DUE: March 20, 2020 Answer the following questions, carefully showing your work. Present...

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Microsoft Word - Homework 3 - Q - W20 1 ECON202 Winter 2020 Name____________________________ Homework 3 DUE: March 20, 2020 Answer the following questions, carefully showing your work. Present your answers in order & neatly. You may submit either a hard copy to the physical drop box by my office door (2280 SSB) or you may submit your answers electronically through Canvas Assignments as either a single PDF file or a single WORD file. Multiple files will not be accepted! 1. Watch the video on “People,” Chapter 3 of NPR’s Planet Monday Makes a T-Shirt video series (PAGES>URLs>scroll down under the Production subtitle). Note that it reports the typical garment worker in Bangladesh earns about $80 per month. This wage rate is much lower than the minimum wage required in the U.S. Use the supply-and- demand model to explain verbally and illustrate graphically how moving t-shirt production from the U.S. to countries like Bangladesh has affected the well-being of U.S. t-shirt consumers. (8) 2 2. Your firm produces soccer balls and its labor productivity is shown below. 3. a. If you hire 15 units of labor, what will be the average product of labor? State below and show clearly on the graph. (2) b. If you hire 15 units of labor, what’s the total number of soccer balls your firm can produce? Compute below. (2) c. At what amount of labor does diminishing marginal returns begin? State below and show on the graph. (2) Q labor Q Soccer balls 5 10 15 20 25 MP AP 500 1000 1500 3 3. You run a perfectly competitive firm that produces soybeans. The equilibrium price of a bushel of soybeans is $30. Q soybeans (bushels) 1000 2000 3000 4000 5000 P ( $) 10 20 30 a. What quantity of output will maximize your firm’s profit in the short run? State below and show on the graph. (3) b. How much profit will your firm earn at the profit maximizing quantity? Compute below and show on the graph. Shade and label profit on the graph. (3) c. Show on the graph your firm’s individual supply of corn in the short run. Highlight it and label it “S”. (3) MC ATC AVC 4 4. You run a perfectly competitive firm which produces wheat and the graph below shows your firm’s long run production cost structure. a. Show on the graph over which plant sizes your firm experiences economies of scale (increasing returns to scale). (1) b. What plant size (capacity) would be the best for your firm? Explain. (2) c. What will be the long run equilibrium price of a bushel of wheat? State below and show on the graph. (2) Q wheat (bushels) P( $) 2000 4000 6000 8000 10,000 $10 $20 $30 MC LRATC 5 5. According to the news article “Should Every Business Scale Up” (FILES>News Articles > Production & Profit Max) what is the main advantage of growing a business, like Sumptown Coffee, larger? What is a disadvantage of increasing the scale of a business? (3) EXTRA CREDIT: Several presidential candidates and the current president come from a business background and argue that running a business prepares them for running the country. a. Describe two ways in which our government is like a business. (1) b. Describe two ways in which our government in not like a business. (1)