Changes

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

3. The difference between total revenue and explicit costs is what kind of profit?  Economic profit?  Taxable profit?  Or some other kind of profit?

3. Explain what "marginal product" is.

4.  Explain what "marginal product" is.

4. Suppose you own a mechanics' shop that fixes cars, and you have 4 employees whom you pay $12 per hour.  On average your 4th employee can fix 3 cars an hour.  What is your marginal product (MP) and marginal cost (MC), and what is the minimum on average that you need to charge customers (your marginal revenue) for fixing cars?  (Assume your only cost is labor, and the customer pays the cost of any parts.)

5.  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.

5.  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.