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Problem #1 It costs a company $35,000 to produce 700 graphing calculators. The company's cost will be $35,070 if it produces an additional graphing calculator. The company is currently producing 700 graphing calculators. 1. What is the company's average cost? 2. What is the company's marginal cost? 3. A customer is willing to pay $60 for the 701 calculator. Should the company produce and sell it? Explain. 4. What is the minimum price the company will charge for the 701th calculator? Problem # 2- Given the below Table Price Quantity Demanded $0 50 $2 40 $4 30 $6 20 $8 10 1. Using the midpoint method, what is the price clasticity of demand between $2 and $4? 2. Using the midpoint method, what is the price clasticity of demand between $6 and $8? 3. Between which two quantities listed is demand most inclastic? 4. Between which two quantities listed is demand most clastic? 5. Between which two quantities listed is demand unit clastic? Problem # 3 Suppose the residents of Mediaville spend all of their income on books, CDs, and DVDs. In 2009, they buy 400 books for $3,200, 200 CDs for $1,400, and 100 DVDs for $900. In 2010, they buy 360 books for $3,240, 250 CDs for $1,500, and 125 DVDs for $1,250. Assume that the market basket for the CPI is defined in the base year. 1. What are the prices of books, CDs, and DVDs in 2009? 2. What are the prices of books, CDs, and DVDs in 2010? 3. Using 2009 as the base year, what is the CPI in each year? 4. Using 2009 as the base year, what is the inflation rate in 2010? 5. Using 2010 as the base year, what is the inflation rate in 2010? Problem # 4 The table below lists the number of people by labor force classification for the country of Shelbyville. Employed 80 million Unemployed 20 million Not in the Labor Force 60 million 1. What is the size of the labor force, and the size of the adult population? 2. What is the unemployment rate? 3. What is the labor force participation rate? Problem # 5 Figure Wage 130 125 Laber supply 100 75 50 Labor demand 25 15 20 25 30 35 40 Quantity of Labor 1. If the minimum wage is set at $100, how many will be unemployed? 2. If the minimum wage increases from $100 to $125, how many additional workers will be unemployed? 3. If the minimum wage is equal to $125, what is the quantity of labor supplied, the quantity of labor demanded, and number unemployed? 4. Without a minimum wage, what is the equilibrium level of employment? Explain what happens to the level of employment if the minimum wage is equal to $125. 5. At a minimum wage of $125, how much is the surplus of labor?

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Economics Problems
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