Can someone assist me with these two questions. Thanks
A perfectly competitive firm's demand is ____________ elastic and equal to ____________ which is equal to ____________.
A firm is allocating 16 hours a day on its assembly line to producing goods A and B, 12 hours to A and 8 to B. The marginal product of the facility for A is 50 and for B is 40. The marginal revenue of A is $20 and the marginal revenue of B is $30.a. The firm should allocate more time to ______ and less to ______.
b. If the firm allocates 13 hours to A and 7 to B, revenue will ______ by $______.
c. If the firm allocates 11 hours to A and 9 to B, revenue will ______ by $______.
whats up
I can't seem to answer these questions
Question 1: A perfectly competitive firm's demand is ____________ elastic and equal to ____________ which is equal to ____________.
To answer this question, we need to understand the concept of elasticity of demand in perfect competition.
In perfect competition, a firm faces a horizontal demand curve, meaning that the price is constant regardless of the quantity produced. This means that the demand for a perfectly competitive firm is perfectly elastic.
The demand facing a perfectly competitive firm is also equal to the market price, which is determined by the intersection of the market supply and demand curves.
Therefore, the answer is:
A perfectly competitive firm's demand is perfectly elastic and equal to the market price, which is equal to the equilibrium price determined by the intersection of the market supply and demand curves.
Question 2:
a. The firm should allocate more time to ______ and less to ______.
To answer this question, we need to compare the marginal products and marginal revenues for goods A and B.
The marginal product (MP) indicates the additional output produced by using one more unit of input (in this case, time on the assembly line). The marginal revenue (MR) indicates the additional revenue earned from selling one more unit of output.
Comparing the marginal products, we see that the MP for A (50) is higher than the MP for B (40). This means that each additional hour spent on producing good A generates more output compared to each additional hour spent on producing good B.
Comparing the marginal revenues, we see that the MR for A ($20) is lower than the MR for B ($30). This means that selling one more unit of good B will generate more additional revenue compared to selling one more unit of good A.
Based on these comparisons, the firm should allocate more time to producing good B and less time to producing good A.
b. If the firm allocates 13 hours to A and 7 to B, revenue will ______ by $______.
To answer this question, we need to calculate the change in revenue when the firm changes the allocation of time between goods A and B.
The change in revenue is equal to the change in the number of units produced multiplied by the respective marginal revenue.
For good A:
Change in revenue from increasing production of A by 13 - 12 = 1 unit: 1 * $20 = $20
For good B:
Change in revenue from decreasing production of B by 8 - 7 = 1 unit: 1 * $30 = $30
Therefore, revenue will increase by $20 + $30 = $50.
c. If the firm allocates 11 hours to A and 9 to B, revenue will ______ by $______.
Using the same logic as above:
For good A:
Change in revenue from decreasing production of A by 12 - 11 = 1 unit: 1 * $20 = $20
For good B:
Change in revenue from increasing production of B by 8 - 9 = -1 unit: -1 * $30 = -$30 (Note: a negative change means a decrease in revenue)
Therefore, revenue will decrease by $20 - $30 = -$10.