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ECO 301 Intermediate Microeconomics Week 5 Homework Problem Answer

Homework Problems:
 Chapter 8: 8.1(a-c), 8.2(a-d), 8.5(a-e), 8.7(a-d), 8.9(a-c)

8.2a Ans:
 Now, the land mower charge is set at $100 per week
 The total cost function changes to
 8.2b Ans:
 Let Beth’s weekly profit be p.
 Then, now Cost function is
 TC = 0.1*q2 + 10q + 50 + 0.5p
 8.2c Ans:
 If Beth’s greedy father imposes a charge of USD 2 per acre for the use of family mower
 then, TC = 0.1*q2 + 10q + 50 + 2q = 0.1*q2 + 12q + 50
 To maximize profit, MR = MC
 8.2d Ans:
 If Beth’s father collects his $2 by collecting 10 % of the revenue from each acre
 Then the
……………………….

8.9a Ans:
 Total Cost = Cost of Labor + Cost of Capital
 = Wages*Labor Hours + Rents*Capital = 10*100 + 5*L
 = 1000 + 5L as capital is fixed in the
………………………………………..

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