What happens when a firm encounters diminishing returns? What causes diminishing returns?
What will be an ideal response?
Ques. 2Assume that a traffic ticket attorney is no more productive today than he was 10 years ago but he is now earning 50 more in salary. How do you explain this apparent paradox?
What will be an ideal response?
Ques. 3What is a constant-cost industry? What does the long-run industry supply curve look like for a constant-cost industry?
What will be an ideal response?
Ques. 4What is the distinction between external and internal economies and diseconomies of scale in an industry?
What will be an ideal response?
Ques. 5Toothpicks are sold in a perfectly competitive market. The market price is currently 3 per box of one hundred toothpicks.
At its current level of production, a representative firm in the toothpick industry is producing at a level of output such that long-run average cost is 3.25 per box of one hundred toothpicks. Given this information, is the toothpick industry in equilibrium? Explain.
Ques. 6Marty's Seafood Company sells fish in a perfectly competitive market. The market price is currently 3 per pound. At its current level of production, long-run average cost at Marty's Seafood Company is 2.75 per pound.
If Marty's Seafood Company is representative of firms in the industry, is this industry in equilibrium? Explain.
Ques. 7If an indifference curve were concave instead of convex to the origin, what implication would that have if the consumer reduces consumption of one good but still wants to enjoy the same level of utility in a two-good world?
What will be an ideal response?
Ques. 8How can a consumer's demand for a good be derived using indifference curve analysis?
What will be an ideal response?