# Eco questions

The Zaxon company produces one product and labour is the only variable resource in the production process. In the short run, Zaxon faces a horizontal demand curve at 20\$ per unit. The average product of labour in the short run is: Resource Units | Average product of labour 1 25 2 22.5 3 20 4 17.5 If the price of each unit of labour (worker-days) is \$350, and only whole units can be employed, how many units of labour will Zaxon employ? A. 1 B. 2 C. 3 D. 4 2. Which of the following would most be most likely to have gains from an unexpected increase in the inflation rate? A. Holders of floating rate securities B. The owner of a shopping mall C. A home owner with a fixed-rate mortgage D. Workers in the auto industry

first question D

1 B 2 C

second C?

1. B 2. C

When there is anunexpected increase in inflation, the real amt of money the lender is paying will be less since the real interest rate is now lower becuase of the increase in inflation

how did you guys get b on the first one?

On the first question the 3rd workers marginal cost exceeds the marginal revenue. The second is C because the fixed rate mortgage borrower is paying less in “real” with an unexpected increase in inflation.

How does everyone type so fast!?! Or maybe it’s just me typing slow.

can someone put the calculations down for the first one?

D is wrong - i calculated average -stupid me thanks

Sure _____Marginal Revenue_____Marginal Cost 1________500________________350 2________400________________350 3________300________________350 You wouldn’t employ the 3rd worker because he/she is not bringing in as much as he costs.

barthezz first one costs 350 and produces 25*20=500 second one costs 350 and produces 2*22.5*20-500=400 or 45-25=20 units third one costs 350 and produces 3*20-45=15 units @20=300 mr

Profit at each level. 25 * 20 - 350 = 150 2 * (22.5 * 20 - 350) = 200; 3 * (20 * 20 - 350) = 150;

thank you so much ttouchst & florinpop

thanks also disptra