# Answers to chapter 8 - Solutions to End-of-Chapter...

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Solutions to End-of-Chapter Exercises Chapter 8 [23] Section 8.1 [23.1]: Economic Cost and Economic Profit 1.1 opportunity cost 1.2 opportunity cost, time, funds 1.3 40000, 8000 1.4 short 1.5 long 1.6 a. The opportunity cost of capital is \$2,000 per year, or \$2 per lawn. MC = \$24; AC = \$24 + \$2 = \$26. b. The opportunity cost of capital is \$2,000 per year, or \$4 per lawn. MC = \$24; AC = \$24 + \$4 = \$28. Section 8.2 [23.2]): A Firm with a Fixed Production Facility: Short-Run Costs 2.1 J 2.2 specialization and increasing labor productivity 2.3 diminishing returns 2.4 U 2.5 Diminishing returns, spreading the fixed cost 2.6 decrease 2.7 average 2.8 True 1: 60, 10, 70, -- , 60, 10, 70 2: 60, 18, 78, 8 , 30, 9, 39 3: 60, 30, 90, 12, 20, 10, 30 4: 60, 45, 105, 15, 15, 11.25, 26.25 5: 60, 65, 125, 20, 12, 13, 25 2.10 a. \$40 per paddle = [1/10] x [\$150 for entrepreneur+ 3 x \$50 for other workers + \$100 fixed cost] b. \$25 per paddle = [1/10] x [4 x \$50 for labor+ \$50 fixed cost] c. \$20 per paddle = [1/10] x [2 x \$50 for labor+ \$100 fixed cost]

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Answers to chapter 8 - Solutions to End-of-Chapter...

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