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ECON 202, Principles of Microeconomics

Homework Assignment #2

 

Please answer all questions. Write your answers in red ink.

1. James quits his job as a company financial officer (CFO), where he was earning $50,000 per year to start her own financial consulting firm. He converts a building that he owns, which was previously rented for $12,000 per year, into and office. Also, he withdraws and uses her $100,000 savings, on which he was earning $5,000 (5 percent) interest per year, to start his business. In her first year of business, he earns $150,000 and has the following expenses: Utilities, $12,000; wages (paid to an assistant), $30,000, and materials, $20,000.  (Show your work)                                                                    

 a. Calculate James’ accounting profit.

Accounting profit = Revenue – Utilities – Wages – materials

                              = 150,000 – 12,000 – 30,000 – 20,000

                              = $ 88,000

b. calculate James’ economic profit.

Economic profit = Revenue – Utilities – Wages – materials – salary as a CFO forgone – Rent      

                              foregone – Savings on earning foregone

                              = 150,000 – 12,000 – 30,000 – 20,000 – 50,000 – 12000 – 5,000

                              = $ 21,000

(20 points)

2.  The table below represents a partially completed production data of a firm. Fill in the blanks based on the information provided, then, answer the questions below.

 

Unit of Labor

Total

 Product (TP)

Average Product (AP)

Marginal Product (MP)

1

30

30

30

2

70

35

40

3

90

30

50

4

100

25

10

                   (14 points)           

                  

                        Note: You must first fill in all the blanks in the table before you attempt to                                                 answer the questions. Only providing the answers will not earn you any points                                         even if             correct.

 

a.At 2 units of labor, TP = 70 and AP = 35.

b.At 3 units of labor, AP = 30 and MP = 50.

c.At 4 units of labor, TP = 100 and AP = 25.

(12 points)

3.  The table below represents a partially completed cost data of a firm. Fill in the blanks based on the information provided then, answer the questions below.

    

 

 

Output

 

Total

Cost

Total Fixed Cost

Total Variable Cost

Average Fixed Cost

Average Variable Cost

Average Total

Cost

 

Marginal Cost

1

2

3

4

 

560

960

1700

2800

500

500

500

500

60

460

1200

2300

5.00

2.50

1.67

1.25

0.60

2.30

4.00

5.75

5.60

4.80

5.67

7.00

5.60

4.00

7.40

11.00

Note: You must first fill in all the blanks in the table before you attempt to answer the questions. Only providing the answers will not earn you any points even if correct.

(46 points)

 

     a. What is the total fixed cost when 400 units of output are produced?

 

          500

 

     b. What is average total cost when 200 units of output are produced?

 

         4.80

 

     c. What is average fixed cost when 300 units of output are produced?

 

         1.67

 

     d. What is the marginal cost of the 250th unit of output?

 

The marginal cost at the 250th output is equal to the total cost at 250th unit less the total cost at the 249th unit. Since fixed cost remains the same at all levels, the marginal cost will be equal to the unit variable cost.

 

(12 points)

 

1)      Ans:

            node* insert(node* head,float data)

{

            node* newNode=new node;

            newNode->data=data;

            newNode->prev=NULL;

            newNode->next=NULL;

            NodePtr temp;

            if(head==NULL) /*This is for empty list case*/

            {

                        head=newNode;

                        return head;

            }

           

            for(temp=head;temp->next!=NULL;temp=temp->next);

           

            temp->next=newNode;

            newNode->prev=temp;

                        return head;

            }

 

2)      int isThere(node* pointer, int lookingfor)

{

            if(pointer==NULL)

                        Return 0;

            else

            {

                        if(node->data==lookingfor)

                                    return 1;

                        else

                                    isThere(pointer->next,lookingfor);

            }

}

 

3)

 

Ans:

 

bool isEmpty()

{

            if (Top==0)

                        return true;

            else

                        return false;

}

 

 

int pop()

{

            if(!isEmpty())

            {

                        int popdata=Stack[--Top];

                        return popdata;

            }

            else

                        return -1;

}

 

 

     4)

ANS:

int count(node* front, node* rear)

{

            int cnt=0;

            while(front!=rear)

            {

                        cnt++;

                        front =front->next;

            }

            return cnt;

}

 

 

 

5)

            PseudoCode:

 

            Step1:

                        Allocate memory for new node and add data to it.

            Step2:

                        If head is null make node as head and return it.

            Step3:

                        If head is not null

                                                Traverse till end of the list and insert at the end.

Code:

node* add(node* head,char data)

{

            node* newNode=new node;

            newNode->data=data;

            newNode->next=NULL;

            NodePtr temp;

            if(head==NULL) /*This is for empty list case*/

            {

                        head=newNode;

                        return head;

            }

           

            for(temp=head;temp->next!=NULL;temp=temp->next);

           

            temp->next=newNode;

                        return head;

            }