ESSENTIALS OF ECONOMICS
4th Edition
ISBN: 9781464188466
Author: KRUGMAN
Publisher: Norton, W. W. & Company, Inc.
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Question
Chapter 6, Problem 3P
To determine
Concept Introduction:
Here,
- AFC is the average fixed cost.
- AVC is the
average variable cost . - ATC is the average total cost.
Average fixed cost (AFC): Fixed cost is the cost which is constant for the firm irrespective of the output produced by the firm. So the AFC is the fixed cost per unit produced by the firm. The formula to calculate the average fixed cost is:
Here,
- AFC is the average fixed cost
- TFC is the total fixed cost
- Q is the quantity of output.
Average variable cost: Variable cost is not a constant cost for the firm, it changes with the change in output. So the AVC is a per unit cost of that variable input. It is calculated as follows:
Here,
- AVC is the average variable cost
- TFC is the total fixed cost
- Q is the quantity of output.
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10.As COVID-19 came about, consumers' relationship with toilet
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describes this scenario as depicted in Snell's 2020 article?
A. The demand curve shifted left and the supply curve shifted left
B. The demand curve shifted left and the supply curve shifted right
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D. The demand curve shifted right and the supply curve shifted right
5. Supply and Demand. The graph below shows supply and demand curves for
annual medical office visits. Using this graph, answer the questions below.
P↑
$180
$150
$120
$90
$60
$30
4
8
12 16 20 24 28 32 36
a. If the market were free from government regulation, what would be the
equilibrium price and quantity?
b. Calculate total expenditures on office visits with this equilibrium price and quantity.
c. If the government subsidized office visits and required that all consumers were to
pay $30 per visit no matter what the actual cost, how many visits would consumers
demand?
d. What payment per visit would doctors require in order to supply that quantity of
visits?
e. Calculate total expenditures on office visits under the condition of this $30 co-
payment.
f. How do total expenditures with a co-payment of $30 compare to total expenditures
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4. The table below shows the labor requirements for Mr. and Mrs.
Howell for pineapples and coconuts. Which is the most accurate
statement?
A. Mrs. Howell has a comparative advantage in coconuts and the
opportunity cost of 1 coconut for Mrs. Howell is 4 pineapples
B. Mrs. Howell has a comparative advantage in pineapples and the
opportunity cost of 1 pineapple for Mrs. Howell is .25 coconuts.
C. Mr. Howell has a comparative advantage in pineapples and the
opportunity cost of 1 pineapple is 1 coconut.
D. Mr. Howell has a comparative advantage in both pineapples and
coconuts and should specialize in pineapples.
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1 Pineapple
1 Coconut
Mr. Howell
1 hour
1 hour
Mrs. Howell
1/2 hour
2 hours
Chapter 6 Solutions
ESSENTIALS OF ECONOMICS
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