Economics Homework Six - Model - Revision history

AddisonDM at 01:23, March 9, 2011

2011-03-09T01:23:21Z

AddisonDM at 03:33, March 5, 2011

2011-03-05T03:33:18Z

Aschlafly: correct FC figure in question 6

2009-10-29T23:27:04Z

correct FC figure in question 6

Aschlafly: period

2009-10-28T20:20:24Z

period

Aschlafly: /* Honors */ better

2009-10-28T20:19:44Z

Honors: better

Aschlafly: Protected "Economics Homework Six - Model": model answers are complete ([edit=sysop] (indefinite) [move=sysop] (indefinite))

2009-10-26T04:49:26Z

Protected "Economics Homework Six - Model": model answers are complete ([edit=sysop] (indefinite) [move=sysop] (indefinite))

Aschlafly: done

2009-10-26T04:45:17Z

done

Aschlafly: added one

2009-10-26T04:25:16Z

added one

Aschlafly: added one

2009-10-26T02:55:56Z

added one

Aschlafly: two more

2009-10-26T02:48:07Z

two more

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 :Fixed costs can be easily identified by seeing what the total costs are when the output is zero. Variable cost are identified as the costs that help increase your output.  (Leonard)
-:... An example of a variable cost is taxes.  (Timothy)
+:... An example of a variable cost is [[taxes]].  (Timothy)
 .  The Lecture mentioned how a prior student in this course is paying her way through college by working as a waitress in a fancy Manhattan restaurant.  Suppose her boss told her one day, "We were profitable last month.  To increase our profits next month, I'm going to double our number of waitresses so that we can serve more people!"  But our former economics student told him that his plan would fail because there is _____________ returns of scale in the restaurant, because more waitresses would result in more wasted time talking to each other and waitresses getting in the way of each other.

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	:I think this is possible, but not necessarily true. Marriage alone does not actually guarantee anything. Marriage would probably lead to a greatly efficient division of labor when the spouses fill the traditional roles: husband primarily making money, and wife helping to educate the kids and take care of the house. However if there is animosity between the spouses over these roles (this might have the same effect as transaction costs!) the efficiency will be impaired. But if the spouses are agreed to these roles (absence of transaction costs) then the division of labor will be extremely efficient. (Addison)		:I think this is possible, but not necessarily true. Marriage alone does not actually guarantee anything. Marriage would probably lead to a greatly efficient division of labor when the spouses fill the traditional roles: husband primarily making money, and wife helping to educate the kids and take care of the house. However if there is animosity between the spouses over these roles (this might have the same effect as transaction costs!) the efficiency will be impaired. But if the spouses are agreed to these roles (absence of transaction costs) then the division of labor will be extremely efficient. (Addison)
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		+	[[Category:Economics lectures]]

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 .  Suppose you spent one million dollars to build your factory, and another million dollars for materials and labor and electricity to make 50 cars.  What is your fixed cost, average variable cost, and average total cost?  Now suppose it costs you $18,000 to make a 51st car.  What is your marginal cost?
-:The fixed cost would be $2,000,000, the average variable cost would be $20,000, and the average total cost would be $40,000, [and with] the 51st car my marginal cost would be $18,000.  (Matt)
+:The fixed cost would be $1,000,000, the average variable cost would be $20,000, and the average total cost would be $40,000, [and with] the 51st car my marginal cost would be $18,000.  (Matt)
 :FC-$1,000,000 VC-$1,000,000 AVC-$20,000/per unit ATC-$40,000/per unit MC-$18,000 (Aran)

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 :Marginal cost of labor. (Duncan)
-:The wage rate, which is the marginal cost of labor.  Match the marginal product of labor to the marginal cost of that same input, which is labor (Instructor)
+:The wage rate, which is the marginal cost of labor.  Match the marginal product of labor to the marginal cost of that same input, which is labor. (Instructor)
 .  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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 .  Suppose there is a sudden increase in the market price for a firm's widget.  The firm will hire more employees to produce more output until the point where the value of its marginal product of labor equals its _____________.  [Hint: the answer is NOT simply "marginal cost"].
-:Marginal cost of labor[, the wage rate]. (Duncan)
+:Marginal cost of labor. (Duncan)
-:Match the marginal product of labor to the marginal cost of that same input, which is labor (Instructor)
+:The wage rate, which is the marginal cost of labor.  Match the marginal product of labor to the marginal cost of that same input, which is labor (Instructor)
 .  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.

← Older revision	Revision as of 04:49, October 26, 2009
(No difference)

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 :The plan would fail because there is a decreasing returns of scale in the restaurant, because more waitresses would result in more wasted time talking to each other and waitresses getting in the way of each other. (Shanna)
 .  Give an example of a "short run" cost for a firm, and give an example of a "long run" cost.  This can refer to any type of firm, from a grocery store to a baseball team to a homeschool.
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 .  Suppose there is a sudden increase in the market price for a firm's widget.  The firm will hire more employees to produce more output until the point where the value of its marginal product of labor equals its _____________.  [Hint: the answer is NOT simply "marginal cost"].
-:Marginal cost of labor[, the wage rate]. (Duncan]
+:Marginal cost of labor[, the wage rate]. (Duncan)
 .  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.
 .  Are "long run" average costs lower than "short run" average costs and, if so, why?
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 <br>(c) use as much material as possible until there are diminishing returns
 <br>(d) use resources such that their marginal products per unit cost are equal
 .  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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	:Fixed costs can be easily identified by seeing what the total costs are when the output is zero. Variable cost are identified as the costs that help increase your output. (Leonard)		:Fixed costs can be easily identified by seeing what the total costs are when the output is zero. Variable cost are identified as the costs that help increase your output. (Leonard)
		+
		+	:... An example of a variable cost is taxes. (Timothy)

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

← Older revision		Revision as of 02:55, October 26, 2009
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	:An example of a short run cost is fixing a leak in the roof; an example of a long run cost is replacing the roof. (Nat)		:An example of a short run cost is fixing a leak in the roof; an example of a long run cost is replacing the roof. (Nat)
		+
		+	:Short run would be renting a car; long run would be buying a car. (Dan)

	:An example of a short run cost for a clothing store would be the boss putting someone working behind the customer-service counter into the store pricing articles of clothing, because they had a lack of people pricing clothing. An example of a long run cost would be the boss hiring another person to be pricing clothing, thus fixing the problem permanently, rather then just temporary as in the first example. (Deborah)		:An example of a short run cost for a clothing store would be the boss putting someone working behind the customer-service counter into the store pricing articles of clothing, because they had a lack of people pricing clothing. An example of a long run cost would be the boss hiring another person to be pricing clothing, thus fixing the problem permanently, rather then just temporary as in the first example. (Deborah)

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 .  Give an example of a "short run" cost for a firm, and give an example of a "long run" cost.  This can refer to any type of firm, from a grocery store to a baseball team to a homeschool.
 :An example of a short run cost for a clothing store would be the boss putting someone working behind the customer-service counter into the store pricing articles of clothing, because they had a lack of people pricing clothing. An example of a long run cost would be the boss hiring another person to be pricing clothing, thus fixing the problem permanently, rather then just temporary as in the first example. (Deborah)
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 .  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.)
 :3 cars per hour, $4, $4.  (Jonathan S.)