Question

8. Lefty has an income of $30. Bread is priced at $1.50 per loaf. A jar of honey is priced at $3. Lefty's income goes up to $45. With his new income what are the most number of bread loaves Lefty can purchase? Alternatively, what are the most number of jars of honey he can buy? a. 5; 25 b. 10:40 c. 15; 30 d. 30; 15 9. Use the data below to determine after what point the law of diminishing marginal returns, in terms of output, become apparent: Output per day Number of employee hours per day 0 1 2 0 33 66 99 132 165 4 a. b. 66 c. 99 d. 132 10. Complete the table below. Then determine what the MU of the fourth dinner would be Number of dinners Total Marginal out per week utility Utility 1 150 100 300 325 a. 60. b. 375 C25. d. 100

Answer 1

8. Ans: 30 ; 15

Explanation:

Most number of bread loaves lefty can purchase = $45 / $1.50 = 30

Most number of jars of honey lefty can purchase = $45 / $3 = 15

9. Ans: 66

Explanation:

Number of employee hours per day (L)	Output per day (Q)	Marginal product = ∆Q/∆L
0	0
1	33	33.00
2	66	33.00
4	99	16.50
7	132	11.00
11	165	8.25

After the output level of 66, law of diminishing marginal return become apparent because after the output level of 66, marginal product declines.

10. Ans: 25

Explanation:

Number of dinners out per week(Q)	Total Utility	Marginal utility = ∆TU/∆Q
1	150	150
2	250	100
3	300	50
4	325	25