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Economics Model Answers Thirteen (view source)
Revision as of 17:43, May 20, 2007
, 17:43, May 20, 2007no edit summary
6. Now turn to Figure A (right). What is the opportunity cost of shifting production from B to C?
6. Now turn to Figure A (right). What is the opportunity cost of shifting production from B to C?
'''The opportunity cost is 600 minus 200 cars, which equals 400 cars.'''
7. Suppose that is your firm in Figure A (attached). What changes might enable you to move production to point D?
7. Suppose that is your firm in Figure A (attached). What changes might enable you to move production to point D?
'''A marvelous new invention for my factories to increase their production.'''
8. The term “normal profit” means “zero economic profits,” which occurs when total revenue equals explicit costs (like cash expenditures) plus implicit costs (like opportunity costs of wasted time). In Figure B (attached), at point A, what kind of profits does the company have: (a) more than a “normal profit”, (b) equal to a “normal profit” or (c) less than a “normal profit.”? Explain.
8. The term “normal profit” means “zero economic profits,” which occurs when total revenue equals explicit costs (like cash expenditures) plus implicit costs (like opportunity costs of wasted time). In Figure B (attached), at point A, what kind of profits does the company have: (a) more than a “normal profit”, (b) equal to a “normal profit” or (c) less than a “normal profit.”? Explain.