Point elasticity of the firms

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Reference no: EM137110

Q1. Consider the firm with a single factor of production defined implicitly by the relation, z = q3 + 4q where z is the variable input and q is output. The firm faces the following average revenue function: p = 10 - 2q, Calculate the point elasticity of the firm's total sales revenue with respect to the amount of labor used when q = 2.

Q2. Q2. Government undertakes a significant fiscal contraction, reducing government purchases by $100 billion and increasing tax revenues by $100 billion through a higher effective corporate tax rate. In this case, I understand that the saving curve shifts to the right and the investment curve shifts to the left, but my question is, would the saving curve shifts more than the investment curve?

Reference no: EM137110

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