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Economics Homework Thirteen - Model (view source)
Revision as of 03:51, December 19, 2009
, 03:51, December 19, 2009a start
1. Which is true about the average fixed costs (AFC) of a firm?
(a)a firm can eliminate these costs by shutting down in the short run.
<br>(b) as output increases, AFC decreases
<br>(c) as output increases, AFC increases
<br>(d) AFC is part of average variable costs
Briefly explain your answer.
2. Some politicians complain about how people are losing their jobs to workers in China. Is this problem the result of "free trade" or "protectionism"?
3. What is one of the primary responsibilities of the Federal Reserve Bank?
4. Review: Suppose that after completing this course, you start a new company. In your first year, you "broke even" (had zero profits), and in your second year you want to increase your revenue and profits. After careful study of your market, you decide that you can increase your revenue by increasing your price. Therefore your good must be price elastic/inelastic (choose one).
5. A monopolistic competitive firm has the following characteristic that ''is lacking'' for a perfectly competitive firm:
(a) There are low barriers to entry
<br>(b) MR = MC in the long run.
<br>(c) P > MC
<br>(d) There are many competitors.
Choose one of the above and explain your answer.
6. You can go on www.orbitz.com and watch the price of airline tickets change from day-to-day. If you pick fixed dates of travel, such as Jan. 15 to fly somewhere and Jan. 18 to return, then you will notice that the closer you get to those dates, the higher the price of the ticket usually is. In other words, the earlier in advance that you can buy a ticket, the cheaper it usually is. Explain how this illustrates a basic difference between long run and short run costs.
7. Pick any aspect of monopolistic competition (other than problem 5 if you answered that) and explain it.
8. Explain why in long-run equilibrium the price charged in monopolistic competition is greater than marginal cost but equal to average total cost.
9. Economics is sometimes called the “dismal science” because economists predicted population to grow faster than the food supply, marginal returns to diminish, and profits to vanish. But, in fact, there is an abundance of food and profits have not vanished. Why is economics not so dismal after all?
10. "Protectionism" is a pejorative (negative) word. Can you think of a more positive, flattering word to express the same concept in a supportive way?
11. What is "Keynesian economics" and what is your view of it?
(a)a firm can eliminate these costs by shutting down in the short run.
<br>(b) as output increases, AFC decreases
<br>(c) as output increases, AFC increases
<br>(d) AFC is part of average variable costs
Briefly explain your answer.
2. Some politicians complain about how people are losing their jobs to workers in China. Is this problem the result of "free trade" or "protectionism"?
3. What is one of the primary responsibilities of the Federal Reserve Bank?
4. Review: Suppose that after completing this course, you start a new company. In your first year, you "broke even" (had zero profits), and in your second year you want to increase your revenue and profits. After careful study of your market, you decide that you can increase your revenue by increasing your price. Therefore your good must be price elastic/inelastic (choose one).
5. A monopolistic competitive firm has the following characteristic that ''is lacking'' for a perfectly competitive firm:
(a) There are low barriers to entry
<br>(b) MR = MC in the long run.
<br>(c) P > MC
<br>(d) There are many competitors.
Choose one of the above and explain your answer.
6. You can go on www.orbitz.com and watch the price of airline tickets change from day-to-day. If you pick fixed dates of travel, such as Jan. 15 to fly somewhere and Jan. 18 to return, then you will notice that the closer you get to those dates, the higher the price of the ticket usually is. In other words, the earlier in advance that you can buy a ticket, the cheaper it usually is. Explain how this illustrates a basic difference between long run and short run costs.
7. Pick any aspect of monopolistic competition (other than problem 5 if you answered that) and explain it.
8. Explain why in long-run equilibrium the price charged in monopolistic competition is greater than marginal cost but equal to average total cost.
9. Economics is sometimes called the “dismal science” because economists predicted population to grow faster than the food supply, marginal returns to diminish, and profits to vanish. But, in fact, there is an abundance of food and profits have not vanished. Why is economics not so dismal after all?
10. "Protectionism" is a pejorative (negative) word. Can you think of a more positive, flattering word to express the same concept in a supportive way?
11. What is "Keynesian economics" and what is your view of it?