Reference no: EM133129418
1. Suppose that Devon's landlord starts charging a $5 fee for each haircut Devon provides, and that nothing else changes.
a.) Make a table showing Devon's new marginal cost for each of the first 4 haircuts. You can determine Devon's original marginal cost for each haircut by looking at the height of his supply curve in Figure 4.3.
b.) Make a table showing Devon's new supply schedule; include quantities for each of the prices listed in Table 4.1
c.) Draw Devon's original supply curve and his new supply curve after he must pay his landlord $5 per haircut.
2. Draw a smooth, upward-sloping curves to represent supply in the entire soap market and label it "Supply". Suppose that because firms in the soap market are experiencing losses, some shut down. Draw a new market supply curve on the same graph as the old one, showing the general effect of the decrease in the number of firms and label it "Supply".
3. At a price of $18 for a haircut, Devon's supply curve indicates that he would supply 1 haircut. However, if he supplied 2 haircuts for $18 each, he would take in a total of $36. His only costs for providing 2 haircuts would be the $10 marginal cost of the first haircut and the $20 marginal cost of the second haircut, for a total of $30. Explain why Devon would not provide 2 haircuts even though his receipts of $36 would exceed his total cost of $30.
4. Suppose people in your area hire college students to do yard work.
a.) Make a table that indicates the lowest wage that you would accept to provide the first, second, third, fourth and fifth hour of yard work tomorrow evening between 5pm and 10pm. Take into account the other things that you could do tomorrow evening.
b.) Explain any differences between the least you would accept for the first hour of yard work and the least you would accept for the fifth hour of yard work.
c.) Draw your supply curve for yard work
d.) What is one change in this situation that would shift your supply curve? In which direction would this change shift your supply curve?