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| | 2. Define, in your own words, what a "production possibilities curve" is. | | 2. Define, in your own words, what a "production possibilities curve" is. |
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| − | 3. What is the marginal factor cost of a monopsony when it increases is wage for 10 employees from $11 to $12 in hiring an 11th employee? Show your work. | + | 3. Review: how is the elasticity of demand for labor related to the price elasticity of demand for the product of that labor? |
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| − | 4. In terms of P, MP, and W, state when a company in a competitive market hires an additional worker at wage W. | + | 4. Do you think that government policy should give high priority to the Lorenz curve? Include a sentence or two about what you think government economic policy should be. |
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| − | 5. Max unionized all the employees in an industry and then tried to increase both their wages and the number of people employed. Is this possible? Are there conditions which would make it possible? | + | 5. Look again at Figure A. What is the opportunity cost of shifting production from B to C? |
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| − | 4. Look at Figure B (right). If the price of sale falls below P1 then the firm in the short run will (a) increase Q, (b) increase labor, (c) increase price, or (d) shut down. How much profit is it making at a price of P2?
| + | 6. Review: explain again what AFC, AVC and ATC are, and how they relate to each other. When should a firm shut down? |
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| − | 5. Look again at Figure B (right). Assume the firm is perfectly competitive. Explain what AFC is, and use the labels on the graph to describe its amount.
| + | 7. What causes a production possibilities curve to shift outward? |
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| − | 6. Now turn to Figure A (right). What is the opportunity cost of shifting production from B to C?
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| − | 7. Suppose that is your firm in Figure A (attached). What changes might enable you to move production to point D? | |
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| − | 6. Suppose you manage a monopoly, and want to know the short-run and long-run conditions for shutting down. Explain them in terms of average variable cost (AVC), average total cost (ATC) and price (P).
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| | ===Honors:=== | | ===Honors:=== |
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| | Answer 3 out of 4 questions below: | | Answer 3 out of 4 questions below: |
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| − | 10. Look again at Figure C in the lecture (the first one). At what point is total revenue maximized?
| + | 8. Look again at Figure C in the lecture (the first one). At what point is total revenue maximized? |
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| − | 11. Explain why the production possibilities curve is convex (opening downward like the top of a circle) rather than concave (opening upward like the inside of a bowl) or a straight line.
| + | 9. Explain why the production possibilities curve is convex (opening downward like the top of a circle) rather than concave (opening upward like the inside of a bowl) or a straight line. |
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| − | 12. Suppose you are a monopsony, and you must pay $9 to hire nine workers, but in order to hire one more worker you must pay $10. The tenth worker will bring in $15 extra per hour to the firm’s revenue. Does you hire the tenth worker?
| + | 10. Suppose you are a monopsony, and you must pay $9 to hire nine workers, but in order to hire one more worker you must pay $10. The tenth worker will bring in $15 extra per hour to the firm’s revenue. Does you hire the tenth worker? |
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| − | 13. In the term "comparative advantage," to what does the adjective "comparative" refer? What is the term "comparing"? Explain.
| + | 11. In the term "comparative advantage," to what does the adjective "comparative" refer? What is the term "comparing"? Explain. |
| | [[Category:Economics lectures]] | | [[Category:Economics lectures]] |
| | {{DEFAULTSORT: Economics Lecture 11}} | | {{DEFAULTSORT: Economics Lecture 11}} |