Suppose that you are one of rubber producers (sellers) in the perfectly competitive market in Thailand. Make it simple: suppose there are two types of used inputs consisting of land and workers. Assume that, in short-run production, you operate on a fixed size of a land and the cost of renting the land is 2 Baht per day. The table (A) below shows the relationship between the quantity of rubber produced by your company per day and costs of workers per day. The goal of your firm is to maximize (minimize) profits (losses). Table (A) The Quantity of rubber (units) produced per day Costs of workers per day in baht ATC AVC MC 0 0 1 5 2 9 3 12 4 14 5 15 6 18 7 22 8 27 9 33 10 40 Answer the following questions 1. Filling in Table (A) above for ATC, AVC and MC from 0 to 10 units. 2. Using economics analysis, suppose the market price of the rubber in Thailand is 3.5 Baht per unit, how many units of rubber should your company produce and sell per day? How much would be the profit(loss) per day? Show the process on how you get the answers. 3. Using economics analysis, suppose there is an increase in interest rate causing the cost of renting the land increases to 5 Baht per day, would there be any change in the level of output produced given that the price still remains at 3.5 Baht? If yes, how many units of rubber should your company produce and sell per day? How much would be the profit(loss) per day? Show the process on how you get the answers.
Suppose that you are one of rubber producers (sellers) in the
Table (A)
|
The Quantity of rubber (units) produced per day |
Costs of workers per day in baht | MC | ||
| 0 | 0 | |||
| 1 | 5 | |||
| 2 | 9 | |||
| 3 | 12 | |||
| 4 | 14 | |||
| 5 | 15 | |||
| 6 | 18 | |||
| 7 | 22 | |||
| 8 | 27 | |||
| 9 | 33 | |||
| 10 | 40 | |||
Answer the following questions
1. Filling in Table (A) above for ATC, AVC and MC from 0 to 10 units.
2. Using economics analysis, suppose the market price of the rubber in Thailand is 3.5 Baht per unit, how many units of rubber should your company produce and sell per day? How much would be the
3. Using economics analysis, suppose there is an increase in interest rate causing the cost of renting the land increases to 5 Baht per day, would there be any change in the level of output produced given that the price still remains at 3.5 Baht? If yes, how many units of rubber should your company produce and sell per day? How much would be the profit(loss) per day? Show the process on how you get the answers.
Step by step
Solved in 4 steps with 3 images
