Economics Homework Six Answers - Student Thirteen
Economics Homework Six Leonard G
1.) Fixed costs can be easily identified by seeing what the total costs are when the output is zero. Variable cost are identified as the costs that help increase your output.
- Superb, may use as a model! But note that the question asks for an example.
2.) The former economics student would say to her boss that his plan would fail because there is diminishing marginal returns of scale in the restaurant. This would happen because more waitresses would distract and get in the way of one another, causing time to be wasted.
- Correct, but say "decreasing" returns to scale. Don't confuse this with "diminishing marginal utility."
3.) An example of a "short run" cost for a student would be “cramming” information the day before a test. An example of a "long run" cost for a student would be taking time during the week to peacefully and efficiently study for the test.
- Good and highly relevant example!
4.) My marginal product for my mechanics’ shop would be 3 units and my marginal cost would be $4. The minimum on average that I would need to charge my customers for fixing their car would be $4 dollars.
- Correct, but your units need to be straightened out. MP=3 CARS PER HOUR OF LABOR. Don't need to say "$4 dollars." That's redundant.
5.) By going to college to get a degree, you save yourself a great amount of money in the long run. Sure, you might be looking at a steep amount of money to go to college, but think about what you’re going to do when you graduate. You will have a great job that pays way in a good position over the entry level job positions that does not require a college degree. The long run is better than the short run because in the short run, you would have thought that you were saving yourself money by not going to college and getting a low wage management job at the local mall.
- "...have a great job that pays WELL (?) in a good position ..."? Overall, a good answer.
6.) If I spent one million dollars to build a factory, and another million dollars for materials and labor and electricity to make 50 cars, my fixed cost would be the first one million dollars, my a average variable cost would be $20,000, and my average total cost would be $40,000. If it costs me $18,000 to make a 51st car, my marginal cost would be $18,000.
- Superb. Completely correct.
7.) If the annual license fee for my taxicab increased from $1,000 to $1,200, my marginal cost would increase, my average variable cost would stay the same, and my average total cost would increase.
- No, your marginal cost (for an additional taxicab ride) is unchanged. Other two are correct. (Minus 1).
- 69/70. One of the best in the class. Congratulations!