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:
a) Payments for rented manufacturing equipment
b) A firm’s use of a warehouse that it owns and could rent to another firm
c) Wages paid to the firm’s workers
d) The wages the firm’s owner could earn if he worked for another company
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.
Directions for Submitting your Assignment
Complete your assignment in this Microsoft Word® document and save it as Username-MT445Assignment-Unit#.doc (Example:TAllen-MT445Assignment-Unit3.doc). Submit your file by selecting the Unit 3: Assignment Dropbox by the end of Unit 3.