Economics

Economics
Assignment 6 – summer 2016
1. What is the difference between explicit and implicit costs? Which of the costs is most closely associated with opportunity costs and why? Give two examples of each type of costs that you have incurred over the past 30 days. (5)

2. State and explain the law of diminishing returns. How might this law apply if you were studying for an examination for an online course? (5)
3. Suppose that 0 workers generate 0 units of output, 1 worker generates 8 units of output, 2 workers generate 20, 3 workers generate 35, 4 workers generate 45, and 5 workers generate 47 units of output, 6 workers generate 47 units of output, while 7 workers generate 44 units of output. Show all work.

a. Calculate the MP and the AP for each worker (10)
b. Clearly and accurately graph the TP, MP and AP curves. (10)
c. At what point do diminishing returns set in? How would we know this had occurred on each graph? Specifically point it out on the graph. (5)

4. Distinguish between accounting, normal and economic profits. What does normal profit include that accounting profit does not? If Economic profit is = 0, what does that mean for normal profit? Is earning a normal profit a good or bad thing? (10)

5. From your textbook, page 218, question # 3. Complete the entire question. Show all work for all calculations and make sure each graph is clearly and accurately plotted. (35 pts)
6. What does the law of diminishing returns have to do with the shape of the AVC and ATC curves? Explain why those curves are U-shaped. (10)

7. What are economies and diseconomies of scale? Take any three causes of them and explain how they help generate the shape of the long run ATC. (10)

Assignment 5 – summer 2016

1 State and explain the law of diminishing marginal utility. Then, take three goods that you have purchased recently and explain how your utility has behaved. (15)

2. a. Page 163 of your textbook, question # 1 a. Show all your work. (5)
2.b. From the data above, graph the TU and MU curves. (10)
2.c. Discuss the connection between the TU and MU curves. That is, Explain what is happening to the TU curve, when MU is increasing, when MU is decreasing but is > 0, when MU = 0, and when MU is < 0. (15) “Explain” means to explain why this is happening.

3 State the theory of consumer behavior. Pick two goods you have consumed recently and explain how each component of this theory has applied to those two goods. (10)

4. Page 163 of your textbook, question # 2. Show all work. (5)

5. State the rule/law of utility maximization (or, consumer equilibrium). Explain in your own words what it means. (5)

6 Consider the following information: Your income is equal to $ 12. You are to spend that income on goods x and good y. Good x costs $ 2 per unit and Good y costs $ 3 per unit. Show all work. This is a big question – worth 25 points.

a. Using your knowledge of utility and consumer behavior and the data below, show exactly how you would spend your income, on which goods and why.

Q MU x MU y
1 90 150
2 84 120
3 80 90
4 60 60
b. At what point do you reach equilibrium? Why is that considered equilibrium? (5)
7. Based on this chapter only, explain why someone would pay $6 for a bottle of water at Yankee Stadium, but would only buy a case of that water at Pathmark if it were on sale for $3.99? How can this be? (5)