UNIVERSITY OF THE WESTERN CAPE, ECONOMICS DEPARTMENT
ECO151: MICROECONOMICS
WEEK 10 (Oct 11– Oct 15)
HOMEWORK 4 (Chapter 6 & 8)
Surname, Initials: …………………………………… Student number: …………………...
Marks: ……./15
[ROUND ALL ANSWERS TO TWO DECIMALS]
1.
The table below shows Anna’s utility from apples (A) and beans (B). The current price
of apples is R10, and the price of beans is R20.
a.
Complete the table below. The bold number and letters are those you need to
calculate.
b.
(36 x 1/6=6)
Determine from the table how many apples and beans Anna will buy in equilibrium
if her income is equal to R240. Show the weighted marginal utilities that apply to
her equilibrium condition and that she can buy this combination.
𝑀𝑈𝐴
Units
1
2
3
4
5
6
7
8
9
10
A
46
36
G
I
K
M
10
Q
S
𝑀𝑈𝐴
𝑃𝐴
𝑇𝑈𝐴
50
C
E
H
190
216
N
O
R
248
B
D
F
3.0
J
L
1.8
P
0.4
T
𝑀𝑈𝐵
120
112
5
7
9
11
13
20
0
17
𝑇𝑈𝐵
1
3
328
420
10
570
612
14
632
600
(2)
𝑀𝑈𝐵
𝑃𝐵
2
4
6
8
4.0
12
2.1
15
16
18
2. Calculate the average product of labour and marginal product of labour for each
quantity of labour in the table below.
(12x1/2=6)
Labour
TP
AP
MP
1
40
40.00
40.00
2
90
A
1
3
160
B
2
4
210
C
3
5
250
50.00
40
6
280
D
4
7
290
E
5
8
285
F
6
a.
Over what output range does the firm enjoy the benefits of increased specialisation
and division of labour?
(1/2)
b.
Over what output range does the firm experience diminishing marginal product of
labour?
(1/2)