Economics 101 PRINCIPLES OF MICROECONOMICS
	Fall 2020

Production and Costs

The homework should be written on 8 1/2 by 11 paper. If you use paper torn out of a notebook, trim the ragged edges before you turn in your assignment. For questions 1 and 3, show the general formula for each of the variables involved.  For question 2, show all the appropriate calculations. The homework is due by 10:00 AM PDT on Friday, October 23.

1.  Consider a firm with the following production function:  

L	0	1	2	3	4	5	6	7	8
Q	0	20	50	90	120	140	150	150	140

Calculate the MP_L and the AP_L for each level of worker employed.

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2. Suppose you quit a job that was paying you $55,000 a year to start your own Internet related business. You withdraw $300,000 that you had in a savings account that was paying you 4% a year to help start the business. You set up an office in a condo that you own but used to rent out for $1,000 a month. The first year of your operation, you paid salaries totaling $130,000 to three employees. You pay $250 a month in utilities, and you paid a total of $40,000 for supplies that first year. What is your total explicit cost, total implicit cost, and total overall cost for your business the first year?

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3. Fill in the table below: