Economics Homework Six Answers - Student Seventeen
1) zero; An example of a variable cost would be the amount paid for a barrel of oil by a gas station.
3) A short term cost for any company would be the initial start up cost to build facilities. Long term costs would include heating and lighting the building, and in the instance of a grocery store, stocking the shelves with food.
5) This can be explained in terms of long and short term costs by saying the person that does not go to college generally makes more initially than the person who is studying all day long. However, as time goes on, and the more educated person graduates college, that person is more likely to get a higher paying job than the person who is still working for 10$ per hour. So the short term cost for the college graduate is not making money right out of high school, while the long term cost for the individual who started working right out of high school and never got a college degree will be less increases in salary over the course of his working career.
6) Your fixed cost is the million dollars spent to build your factory. Your marginal cost for the 51st car is 18,000$. Your average total cost is 40,000$. And the average variable cost is 20,000$ per unit.
7) The average total, marginal, and variable costs will all increase.
8) Your accounting profits would be zero. While your economic loss would be 8$ per hour.