1. The Sales Manager of a British equipment manufacturer estimates that the firm can sell 1000
units and earn a total revenue of GBP 4,000,000. However, if 1250 units are sold, the total
revenue will be GBP 4,800,000. The marginal revenue per unit associated with 1250 units
instead of 1000 units is closest to:
A. GBP 3200
B. GBP 4000
C. GBP 4500
2. A dairy farm operating in a perfectly competitive market, supplies milk to Dane Inc., manufacturers of sweet yoghurt and milk-based frozen desserts. What will be the most likely impact if the farm increases its milk production and unit sales by 15%?
A. a 15% increase in average revenue.
B. an increase in total revenue of less than 15%.
C. a 15% increase in total revenue.
3. An American firm employs unskilled, semi-skilled, and skilled labor in a cost-minimizing mix at its manufacturing plant. The current wage of unskilled labor is $100 per day and the government passes a law that requires the minimum wage to be $150 per day. The marginal product of unskilled labor is lower than semi-skilled and skilled labor. Since the equilibrium wages for semi-skilled and skilled labor exceed the minimum wage, they are not affected by the new law. Which of the following actions will the firm most likely take in response to the imposition of the minimum wage law?
A. Employ fewer unskilled workers at its plant.
B. Employ more unskilled workers at its plant.
C. Retain the current mix of unskilled, semi-skilled, and skilled workers.