Changes

3.  A customer to our imaginary homeschool dinner expected to pay $40, but we only charged him $25.  An economist would call the $15 difference the  ___________.  (Hint: see Lecture #10 review list)

3.  A customer to our imaginary homeschool dinner expected to pay $40, but we only charged him $25.  An economist would call the $15 difference the  ___________.  (Hint: see Lecture #10 review list)

4. Look at Figure B (attached).  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?

[[Image:Econ13c.jpg|right|250px|thumb|Figures A and B]]

5. Look again at Figure B (attached).  Assume the firm is perfectly competitive.  Explain what AFC is, and use the labels on the graph to describe its amount.

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. Now turn to Figure A (attached).  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?  

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?

===Honors:===

===Honors:===

10.  Look at Figure C (attached).  Assuming it represents the long run, describe what type of industry this is (e.g., monopoly, oligopoly, monopolistic competition, or perfect competition).  Explain your answer.

 

10.  Look at Figure C (right).  Assuming it represents the long run, describe what type of industry this is (e.g., monopoly, oligopoly, monopolistic competition, or perfect competition).  Explain your answer.

11.  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?

11.  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?

12. Look again at Figure C (attached).  This question has three parts.  (I) At what point is there an allocatively efficient quantity?  (II) At what point is revenue maximized?  (III) At what point is profit maximized?  Explain your answers.

12. Look again at Figure C (attached).  This question has three parts.  (I) At what point is there an allocatively efficient quantity?  (II) At what point is revenue maximized?  (III) At what point is profit maximized?  Explain your answers.