Difference between revisions of "Economics Homework Thirteen Answers - Student Four"
(Created page with ''''''Anna M''''' '''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. (b) as output incre...') |
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(a)a firm can eliminate these costs by shutting down in the short run. | (a)a firm can eliminate these costs by shutting down in the short run. | ||
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(b) as output increases, AFC decreases | (b) as output increases, AFC decreases | ||
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(c) as output increases, AFC increases | (c) as output increases, AFC increases | ||
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(d) AFC is part of average variable costs | (d) AFC is part of average variable costs | ||
Briefly explain your answer.''' | Briefly explain your answer.''' | ||
| − | + | (a) - in the short run there are a lot of fixed costs, not so many in the long run. | |
'''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"?''' | '''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"?''' | ||
| − | + | Free trade. | |
'''3. What is one of the primary responsibilities of the Federal Reserve Bank?''' | '''3. What is one of the primary responsibilities of the Federal Reserve Bank?''' | ||
| − | + | To protect the banking system from collapse. | |
'''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).''' | '''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).''' | ||
| − | + | Inelastic. I can increase the price without a drop in demand. | |
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'''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.''' | '''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.''' | ||
| − | + | Basically, short run costs tend to be higher, usually because there is a greater demand for them. It pays to think ahead and get things before the demand for them dramatically increases. | |
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Revision as of 13:13, December 17, 2009
Anna M
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.
(b) as output increases, AFC decreases
(c) as output increases, AFC increases
(d) AFC is part of average variable costs
Briefly explain your answer.
(a) - in the short run there are a lot of fixed costs, not so many in the long run.
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"?
Free trade.
3. What is one of the primary responsibilities of the Federal Reserve Bank?
To protect the banking system from collapse.
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).
Inelastic. I can increase the price without a drop in demand.
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.
Basically, short run costs tend to be higher, usually because there is a greater demand for them. It pays to think ahead and get things before the demand for them dramatically increases.