Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 9, Problem 2.4P
To determine
Whether to agree or disagree with the given statements.
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For each of the following events identify which of the determinates of demand or supply are affected. Also indicate whether demand or supply is increased or decreased. Why?
A stock market crash lowers people’s wealth.
Batelco increases the prices of mobile services.
Diminishing returns mean rising costs while economies of scale mean falling costs. Therefore, a firm cannot be facing both diminishing returns and economies of scale. Do you agree? Why or why not?
The table below presents the average and marginal cost of producing cheeseburgers per hour at a roadside diner.
Cheeseburger Production Costs
Quantity(burgers per hour)
Average Variable Cost (dollars)
Average Total Cost (dollars)
Marginal Cost (dollars)
0
—
—
—
10
$1.00
$6.60
$1.00
20
0.70
3.50
0.40
30
0.70
2.57
0.70
40
0.78
2.18
1.00
50
0.88
2.00
1.30
60
1.07
2.00
2.00
70
1.34
2.14
3.00
80
1.74
2.44
4.50
90
2.23
2.86
6.20
100
2.81
3.37
8.00
a. At a quantity of 40 cheeseburgers per hour, the average total cost of production is (Click to select) falling rising at a minimum and the marginal cost of cheeseburger production is (Click to select) falling rising at a minimum .
b. At a quantity of 60 cheeseburgers per hour, the average variable cost of production is (Click to select) falling rising at a minimum and the average total cost of cheeseburger production is (Click to select) falling rising at a minimum .
It is the month of June, which is the peak season for producing rye. At the current level of
output of 800 units of wheat, the following data exists:
Price = $16
Marginal cost = $8
Marginal Revenue-$8
Average variable cost = $10
Average total cost = $19
Based on these figures, as an microeconomic advisor, what would you advise this firm to do?
The firm should shut down production.
Not sure.
The firm should raise the price and make a loss.
The firm should continue to produce more wheat.
Chapter 9 Solutions
Principles of Economics (12th Edition)
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