1 a Graph the demand curve for cassoulet a The demand curve has a negative slope b Beyonce will sell 2 servings at 27 90 5 servings at 22 44 and 9 servings at 16 79 c If a new study comes out showing cassoulet increases the risk of heart disease the demand curve will decrease If a study comes out showing cassoulet reduces the risk of dementia the demand curve will increase 2 a Servings Total Workers Additional Workers 1 2 3 4 5 6 7 8 9 10 0 3 0 65 1 04 1 5 2 02 2 63 3 32 4 12 5 04 6 09 0 3 0 35 0 39 0 46 0 52 0 61 0 69 0 8 0 92 1 05 The marginal productivity of labor goes down as more is produced and more workers are hired because each additional serving requires more and more workers to make it b To calculate the marginal cost of each serving we multiplied the workers needed by the cost per worker 20 and added the cost of ingredients for that serving 5 19 and 5 53 Servings Total Workers Marginal Cost Additional Workers 1 0 3 0 3 11 19 2 3 4 5 6 7 8 9 10 0 65 1 04 1 5 2 02 2 63 3 32 4 12 5 04 6 09 0 35 0 39 0 46 0 52 0 61 0 69 0 8 0 92 1 05 12 19 12 99 14 39 15 59 17 73 19 33 21 53 23 93 26 53 The MC curve slopes upward because each serving requires more additional workers than the previous which costs more money As Beyonce produces more and more servings the slope of the MC curve gets steeper because the rate of additional workers needed for each serving increases c To calculate the marginal cost if each worker gets a raise to 25 an hour we multiplied the workers needed by the cost per worker 25 and added the cost of ingredients for that serving 5 19 and 5 53 To calculate the marginal cost if each serving is made with only 80 as much labor we multiplied the workers needed by 0 8 then multiplied that by the cost per worker 25 and added the cost of ingredients for that serving 5 19 and 5 53 Servings Total Workers Marginal Cost Additional Workers MC at 25 workers MC Greater Productivity 1 2 3 4 5 6 7 8 9 10 0 3 0 65 1 04 1 5 2 02 2 63 3 32 4 12 5 04 6 09 0 3 0 35 0 39 0 46 0 52 0 61 0 69 0 8 0 92 1 05 11 19 12 19 12 99 14 39 15 59 17 73 19 33 21 53 23 93 26 53 12 69 13 94 14 94 16 69 18 19 20 78 22 78 25 53 28 53 31 78 11 19 12 19 12 99 14 39 15 59 17 73 19 33 21 53 23 93 26 53 The marginal costs are the same with high wages and high productivity as the initial situation As an employer either choice is fine because you make the same amount of profit no matter which you choose As a worker you would prefer the high wages and high productivity because you would get paid more High wages and high productivity is better for society because it allows for people to have more money and society to produce more 3 a Beyonce will sell 7 servings at 19 41 because that is where the two curves intersect b c The dollar value of consumer surplus is 34 83 the dollar value of the producer surplus is 32 46 and the dollar value of the total social surplus is 67 29
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