Econ302-hw4-spring080-1

Econ302-hw4-spring080-1 - 1 Econ302 Homework Assignment 4...

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Econ302 Homework Assignment 4 Due March 26 (Questions 4, 5, and 6 will be graded) Name: 1. Please explain whether the following statements are true or false. a. If the owner of a business pays himself no salary, then the accounting cost is zero,  but the economic cost is positive. b. A firm that has positive accounting profit does not necessarily have positive  economic profit. c. If a firm hires a currently unemployed worker, the opportunity cost of utilizing the  worker’s services is zero. 1
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2.   How does a change in the price of one input change the firm’s long-run expansion  path? 3.   Distinguish between economies of scale and economies of scope.   Why can one be  present without the other? 2
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A   firm   has   fixed   production   costs   of   $5,000   and   a   constant   marginal   cost   of  production equal to $500 per unit produced. a. What is the firm’s total cost function?  Average cost function? b. If the firm wanted to minimize the average total cost, would it choose to be very  large or very small?  Explain. 3
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Econ302-hw4-spring080-1 - 1 Econ302 Homework Assignment 4...

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