Changes

: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.  (Leonard)

: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.  (Leonard)

:... An example of a variable cost is taxes.  (Timothy)

:... An example of a variable cost is [[taxes]].  (Timothy)

2.  The Lecture mentioned how a prior student in this course is paying her way through college by working as a waitress in a fancy Manhattan restaurant.  Suppose her boss told her one day, "We were profitable last month.  To increase our profits next month, I'm going to double our number of waitresses so that we can serve more people!"  But our former economics student told him that his plan would fail because there is _____________ returns of scale in the restaurant, because more waitresses would result in more wasted time talking to each other and waitresses getting in the way of each other.

2.  The Lecture mentioned how a prior student in this course is paying her way through college by working as a waitress in a fancy Manhattan restaurant.  Suppose her boss told her one day, "We were profitable last month.  To increase our profits next month, I'm going to double our number of waitresses so that we can serve more people!"  But our former economics student told him that his plan would fail because there is _____________ returns of scale in the restaurant, because more waitresses would result in more wasted time talking to each other and waitresses getting in the way of each other.

6.  Suppose you spent one million dollars to build your factory, and another million dollars for materials and labor and electricity to make 50 cars.  What is your fixed cost, average variable cost, and average total cost?  Now suppose it costs you $18,000 to make a 51st car.  What is your marginal cost?

6.  Suppose you spent one million dollars to build your factory, and another million dollars for materials and labor and electricity to make 50 cars.  What is your fixed cost, average variable cost, and average total cost?  Now suppose it costs you $18,000 to make a 51st car.  What is your marginal cost?

:The fixed cost would be $2,000,000, the average variable cost would be $20,000, and the average total cost would be $40,000, [and with] the 51st car my marginal cost would be $18,000.  (Matt)

:The fixed cost would be $1,000,000, the average variable cost would be $20,000, and the average total cost would be $40,000, [and with] the 51st car my marginal cost would be $18,000.  (Matt)

:FC-$1,000,000 VC-$1,000,000 AVC-$20,000/per unit ATC-$40,000/per unit MC-$18,000 (Aran)

:FC-$1,000,000 VC-$1,000,000 AVC-$20,000/per unit ATC-$40,000/per unit MC-$18,000 (Aran)

9.  Suppose there is a sudden increase in the market price for a firm's widget.  The firm will hire more employees to produce more output until the point where the value of its marginal product of labor equals its _____________.  [Hint: the answer is NOT simply "marginal cost"].

9.  Suppose there is a sudden increase in the market price for a firm's widget.  The firm will hire more employees to produce more output until the point where the value of its marginal product of labor equals its _____________.  [Hint: the answer is NOT simply "marginal cost"].

:Marginal cost of labor[, the wage rate]. (Duncan)

:Marginal cost of labor. (Duncan)

:Match the marginal product of labor to the marginal cost of that same input, which is labor (Instructor)

:The wage rate, which is the marginal cost of labor.  Match the marginal product of labor to the marginal cost of that same input, which is labor. (Instructor)

10.  Explain the following from the lecture: if inflation is 10% per year for three years, but one particular good keeps the same price during those three years, then its opportunity cost and real price actually decreased.

10.  Explain the following from the lecture: if inflation is 10% per year for three years, but one particular good keeps the same price during those three years, then its opportunity cost and real price actually decreased.

:I think this is possible, but not necessarily true. Marriage alone does not actually guarantee anything. Marriage would probably lead to a greatly efficient division of labor when the spouses fill the traditional roles: husband primarily making money, and wife helping to educate the kids and take care of the house. However if there is animosity between the spouses over these roles (this might have the same effect as transaction costs!) the efficiency will be impaired. But if the spouses are agreed to these roles (absence of transaction costs) then the division of labor will be extremely efficient. (Addison)

:I think this is possible, but not necessarily true. Marriage alone does not actually guarantee anything. Marriage would probably lead to a greatly efficient division of labor when the spouses fill the traditional roles: husband primarily making money, and wife helping to educate the kids and take care of the house. However if there is animosity between the spouses over these roles (this might have the same effect as transaction costs!) the efficiency will be impaired. But if the spouses are agreed to these roles (absence of transaction costs) then the division of labor will be extremely efficient. (Addison)