Economics Homework Six Answers - Student Nine

Economics Homework--Mark B.

1. Fixed costs can be easily identified by seeing what the total costs are when output is _zero__. The price of a good is a variable cost. (Minus 1).

First part is correct. Second part is incorrect. A "variable cost" is a cost that varies with the amount of the output.

2. Decreasing returns of scale.

Good.

3. A short run cost would be to make an employee work overtime, a long run cost would be to build an extension on a factory.

Excellent.

4. Your marginal product is 3 cars, your marginal cost is $4.00, and your marginal revenue is $4.01.

Excellent, but where did the extra penny come from on the marginal revenue? Also, for completeness add the full units, as in MP=3 cars per hour of labor, and MC=$4 per car. (Minus 1).

6. Your fixed cost is $1,000,000; your average variable cost is $20,000; Your average total cost is 40,000; and your marginal cost is $18,000.

Fantastic!

7. a)- no effect

b)- no effect

c)- Increase

Excellent!

8.

a) Your accounting profit or loss is 0

b) Your economic profit or loss is $8.00.

Superb.

Fantastic work! You answered several correctly that others typically missed. 68/70.--Andy Schlafly 22:40, 24 October 2009 (EDT)