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Microeconomics

Anna Blajer-Gołębiewska M. Sc.

Exercise 4. The company produces sophisticated weaponry. The cost of employment is being considered by the company. The graph represents the situation of the company in the market for a labour (factor input).

In the market for chocolate bars, there is a perfect competition / monopoiy.

In the market for labour, there is a perfect competition / monpsony. In other words, in the market for labour the company is the perfect competitor/ monopsonist.

The amount of labour hired by a firm will be..........

The price for one unit of labour will be............m.u.

The total cost of the resource equals........................m.u.

The amount of economic rent earned by labour equals........m.u.

The amount of transfer earnings equals.......m.u

Exercise 5. Suppose that A is the only input used by a firm. The price of A eąuals 12 PLN. The price for the product eąuals 4 PLN.

a)    Fili in the table.

b)    Determine the amount of the factor input, which will be hired by a firm.

A	TP	MP	AP	TRP	MRP
0	0
1	10
2	18
3	24
4	28
5	31
6	o o 2>J>

Exercise 6. Assume that labour is the only input used by the firm.

a)    Fili in the table.

b)    What is the market structure in the market for product?

c)    What is the market structure in the market for product?

d)    Illustrate the situation on the graph.

e)    Determine the changes in the level of input and in the level of production.

FIRM I

TP=X

TR

Px

MR

MP

MRP

YMP

MCR

Pl

L

TC

ATC

MC

n

200

2

2

5

10

10

0,4

2

FIRM II

TP=X

TR

Px

MR

MP

MRP

VMP

MCR

Pl

L

TC

ATC

MC

n

15

10

20

30

20

5

min=

2

FIRM III

TP=X

TR

Px

MR

MP

MRP

VMP

MCR

Pl

L

TC

ATC

MC

n

100

2

2

20

18

5

75

1,8,

29