Question: Suppose Dr. Brown opens a widget factory. Widgets are made by folding a piece of paper 3 times and writing a “W” on it. Dr. Brown hires her Principles of Microeconomics students to make the widgets. Below is the production schedule per worker per hour.

a. Fill in the Marginal Product Column above. At which number of workers does diminishing marginal product begin? Explain your answer.

Suppose Dr. Brown is a monopolist in the widget market. She purchased 1 pen for her factory to make widgets for $10.00. In addition, she pays her students for their widget making and pays for the supplies it takes to make each widget.

b. Fill in the above table. Of the supplies described above, what are variable costs and what are fixed costs?

c. If Dr. Brown shut down her factory in the short run, what would her costs be?

d. Dr. Brown got a license to be the only producer of widgets, what kind of monopolist is she?

Suppose Dr. Brown faces a demand schedule described by the following table.

e. Fill in the blanks above.

f. Using the information from the charts from parts b and e, what is Dr. Brown’s profit maximizing quantity and price? Explain how you got your answer. What is Dr. Brown’s profit at this quantity and price?

g. Graphically depict the equilibrium point, marginal cost curve, marginal revenue curve, demand curve and average total cost curve. Shade in the area representing economic profit.