Answered: 2. Using cheddar cheese, explain in two…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. Draw and describe analytically the set of feasible consumption choices. What is the marginal rate of substitution at the optimal choice?
a. What does an isocost curve represent? b. If the producer's Budget-300 w-5 r-10. Show your procedures (write the isocost equation) and graph the isocost. c. Can you determine if these bundles are part of the same isocost of point b? Set 1(L=44,K-8) Set 2 (L=36,K-12) Set 3 (L=24,K=18)
The inflection point refers to the point where a marginal curve has a slope of zero. a. True b. False
The marginal cost (MC) curve intersects the? Select one: O a. ATC and AFC curves at their minimum point O b. ATC, AVC, and AFC curves at their minimum points O c. AVC and AFC curves at their minimum points. O d. ATC and AVC curves at their minimum points
m a) The demand for biscuits is given by x₁ The income the 5p₁ individual earns is K150. The price of biscuits is K5. Assume that the price of biscuits drops to K3. calculate the total change in demand. b) How much of the total change in demand can be explained by the substitution and income effect?
4. COST RELATIONSHIPS. A firm's total costs can be broken down into fixed costs (e.g., rent) and variable costs (e.g., payroll), so TC = FC + VC. Dividing by quantity converts these to averages, so TC/Q = FC/Q + VC/Q, or ATC = AFC + AVC. The additional cost incurred by producing one additional unit is the marginal cost, so MC = ATC/AQ, where the Greek letter delta (A) means "a change in." Here is a table showing the various costs for a simple firm that sells a product using a building (capital, a fixed input) and workers (labor, a variable input). Assume that the price of labor is 20 and the price of capital is 120. Use these three cost relationships to complete the table. Total Total Average Variable Cost, Сapital, Output, Q Labor, Total Average Fixed Average Total Cost, Marginal Cost, MC Variable K Fixed Cost, TC Cost, Cost, TFC Cost, TVC AVC AFC АТС 1 120 N/A N/A N/A N/A 1 2 1 160 3 1 20 3 6. 1 40
Discuss the difference between the income effect and the substitution eefect, given in the rice in a two commodities world of rice and fish
2. Economies of scale are achieved when ... a) Supply consistently exceeds demand b) High energy efficiency levels are reached and maintained c) Waste is kept to a minimum d) Production quotas are raised
9. Cost-curve shifters The following graph shows the average total cost (ATC) curve, average variable cost (AVC) curve, and average fixed cost (AFC) curve for Caroline's Pizza Parlor when the retail price Caroline pays for pizza dough, including sales tax, is $5 per large pizza. ATC AVC AFC OUTPUT (Pizas per day) PRICE (Dollars per pizza)
In the above figure, the movement from point a to point b reflects an increase in the price of pizza. O a decrease in income if pizza is a normal good. an increase in the supply of pizza. an increase in the number of producers of pizza. O a decrease in the cost of the tomato sauce used to produce pizza.
If Porsha view 3 glasses of juice as a perfect substitute for one cup of soda and vice versa, what is her marginal rate of substitution between juice and soda?
Demand for jewelry increases when our income increases because they are _________. a. Substitute products b. Inferior products c. Normal products d. Complementary products

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2. Using cheddar cheese, explain in two sentences or fewer the following: a. Income Effect b. Substitution Effect c. Law of Diminishing Marginal Returns