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| | 2. The difference between total revenue and explicit costs is what kind of profit? Economic profit? Taxable profit? Or some other kind of profit? | | 2. The difference between total revenue and explicit costs is what kind of profit? Economic profit? Taxable profit? Or some other kind of profit? |
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| − | 3. Marginal product question | + | 3. Explain what "marginal product" is. |
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| − | 4. Do you think the returns to scale from the world's population is increasing, constant or decreasing? Explain your answer. | + | 4. Do you think the returns to scale from the world's population is increasing, constant or decreasing? There is no correct answer but you will be graded on your explanation. |
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| − | 5. | + | 5. Give an example of a "short run" cost for a firm, and give an example of a "long run" cost. It can be any type of firm. |
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| − | 6. | + | 6. Earlier in this course we learned that someone who obtains a college degree earns, over the course of his life, about $500,000 more than someone who does not. How can you explain this fact in terms of the advantages of "long run" costs over "short run" costs? |
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| − | 7. | + | 7. (challenging problem, try at least to earn partial credit) Recall from the last Lecture that a firm increases its output as long as the marginal revenue exceeds the marginal cost. Suppose that marginal revenue is greater than marginal cost, due to an increase in market price for the firm's widget. The firm will hire more employees to produce more output until the value of its marginal product of labor equals _____________. |
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| | ===Honors=== | | ===Honors=== |
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| − | 8. 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. | + | Answer question 8 and then a brief essay about one of the other questions. |
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| + | 8. Answer and discuss: Your firm seeks to produce a certain level of output in the most efficient way (the lowest cost). It should use its resources in which of the following ways: |
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| − | 9. Charity, revisited: Sloan's charitable efforts (Sloan-Kettering) have lasted longer than his business efforts (General Motors). Is this just by chance, or are there reasons why charity lasts longer than business? Feel free to revisit the issue of the interplay between the free market and charity.
| + | (a) use materials that generate the highest marginal product |
| | + | <br>(b) use materials that have increasing returns to scale |
| | + | <br>(c) use as much materials as possible until there are diminishing returns |
| | + | <br>(d) use resources such that their marginal products per unit cost are equal |
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| − | 10. | + | 9. 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. |
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| − | 11. | + | 10. Charity, revisited: Sloan's charitable efforts (Sloan-Kettering) have lasted longer than his business efforts (General Motors). Is this just by chance, or are there reasons why charity lasts longer than business? Feel free to revisit the issue of the interplay between the free market and charity. |
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| | + | 11. Are "long run" average costs lower than "short run" average costs and, if so, why? |
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| | == References == | | == References == |