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| | 4. Do you think the converse of Gresham's Law is true with respect to speech and conversation, such that good speech or conversation (such as discussing the Bible) drives out bad? | | 4. Do you think the converse of Gresham's Law is true with respect to speech and conversation, such that good speech or conversation (such as discussing the Bible) drives out bad? |
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| − | 5. Suppose you own a company that has marginal cost (MC) = $15, average total cost = $20/unit, average variable cost = $8/unit and a price of the sold good (P) = $14. Should you make any additional goods at these numbers? Should you shut down your company? | + | 5. Explain the difference between total cost, average cost, and marginal cost. |
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| − | 6. Suppose you decide you could profitably set the price for a homeschool dance at $15 per ticket, and it would have attracted $150 people. You also determine that 50 out of the 150 people who would have attended would have paid $20 per ticket and 10 out of the 150 would have paid $25 per ticket, and 5 out of the 150 would have paid $30 per ticket, because they would have enjoyed and benefited so much from it. However, the homeschool dance was never held because no one "got around to it." What is the loss in wealth or consumer surplus due to the fact that the event was ''not'' held? | + | 6. Suppose you decide you could profitably set the price for a homeschool dance at $15 per ticket, and it would have attracted $150 people. You also determine that 50 out of the 150 people who would have attended would have paid $20 per ticket and 10 out of the 150 would have paid $25 per ticket, and 5 out of the 150 would have paid $30 per ticket, because they would have enjoyed and benefited so much from it. However, the homeschool dance was never held because no one "got around to it." What is the loss in wealth or consumer surplus due to the fact that the event was ''not'' held? |
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| | ===Honors=== | | ===Honors=== |
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| | Begin studying for the midterm exam and also answer any 3 out of the following 4 questions: | | Begin studying for the midterm exam and also answer any 3 out of the following 4 questions: |
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| − | 7. What is the firm's profit or loss when Q=0 in the honors discussion above? (Answer simply in terms of another cost measure.) Is the firm profitable? | + | 7. Define the term "competition" in a new way by using another powerful term developed in this course. |
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| − | 8. (Challenging, with extra credit) Prove mathematically that MC>MR for all Q>0 in the honors discussion above. (Hint: define MC in terms of the change in AVC, and then regroup the terms and draw conclusions about them to show MC>MR). | + | 8. Suppose the ''labor'' market is perfectly competitive, and that there is a minimum wage above the market rate. Then suppose that the supply of labor increases. Explain what happens as a result. |
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| − | 9. Define the term "competition" in a new way by using another powerful term developed in this course. | + | 9. What is the firm's profit or loss when Q=0 in the honors discussion above? (Answer simply in terms of another cost measure.) Is the firm profitable? |
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| − | 10. Question about perfectly competitive labor market. | + | 10. (Challenging, with extra credit) Prove mathematically that MC>MR for all Q>0 in the honors discussion above. (Hint: define MC in terms of the change in AVC, and then regroup the terms and draw conclusions about them to show MC>MR). |
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| | == References == | | == References == |