Econ 2, Problem set 2

# Econ 2, Problem set 2 - Into to Economic Policy Issues...

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Into to Economic Policy Issues Stephanie Cochran Problem Set 2 Econ 2: Prof Thorson 5/8/06 1. Problem 6 and 7 page 94: 6) Suppose 30 units of labor produce 100, widgets, and 40 units of labor produce 200 widgets. If each unit of labor is paid \$10, what is the marginal cost of producing widgets between those two levels output levels? 7) Using the info listed, plot all the short-run total cost and average cost curves discussed in this chapter. Do the curves have the expected shapes? Explain your answer.

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2. Problem 9 and 10 on page 110 9) A firm has the following cost schedule: a) calculate the firm’s profit or loss for each level of output when the price is \$5.99, \$6.01, \$10.01. b) How many units of output will the profit maximizing or loss-minimizing firm produce at those three prices? c) What is the firm’s supply Schedule 10) You observe the competitive airline industy making economic losses. What do you expect to happen to ticket prices, to the quantity of airline passengers, and to the number of airline companies as time passes?
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