Unit 3 assignment
Please answer the following questions. Submit as a Microsoft Word® document to the Dropbox when completed.
1. Explain the relationship between the price elasticity of demand and total revenue.
2. Is the price elasticity of gasoline more elastic over a shorter or a longer period of time? Explain.
3. Determine whether each of the following is an explicit cost or an implicit cost:
4. Consider the following information in the table for Pat’s Pizza Restaurant and answer the questions below.
|Marginal Product of Capital||4,000|
|Marginal Produce of Labor||100|
|Rental Price of Pizza Ovens||$500|
a. Is the owner of Pat’s Pizza Restaurant minimizing cost?
b. Should he rent more ovens and hire fewer workers or rent fewer ovens and hire more workers? Explain.