problem set answers 10

problem set answers 10 - Dr. Seiji Steimetz ECON 101...

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Dr. Seiji Steimetz ECON 101 Department of Economics California State University, Long Beach Page 1 of 10 A NSWERS FOR P ROBLEM S ET 8 Chapter 10 LEARNING OBJECTIVE LEARNING OBJECTIVE 10.1: Define technology and give examples of technological change. Review Questions 1.1 Technology is the process a firm uses to turn inputs into outputs of goods and services. Technological change is a change in the ability of a firm to produce a given level of output with a given quantity of inputs. 1.2 Technological change could be negative, for instance, when a natural disaster hits, or when a firm hires less-experienced workers. In these cases, the firm would produce a lower level of output with the same inputs. Problems and Applications 1.3 The statement is incorrect because firms can experience technological change in the production of existing products, not just in the introduction of new products. Examples include the firm’s managers rearranging the factory floor or the layout of a retail store, thereby increasing production and sales, retraining workers, or installing faster or more reliable machinery or equipment. 1.4 b., c., and d. are examples of positive technological change because they all involve change that results in the firm being able to produce more output with the same quantity of inputs. Cases a. and e. are not examples of technological change, because the same quantity of inputs is used to produce the same quantity of output. 1.5 The statement is incorrect. The firms could now produce more output (greater sales) with fewer inputs (fewer trucks). Therefore, this is indeed technological change. LEARNING OBJECTIVE LEARNING OBJECTIVE 10.2: Distinguish between the economic short run and the economic long run. Review Questions 2.1 In the short run, at least one of the firm’s inputs is fixed, but in the long run the firm can vary all of its inputs, adopt new technology and change the size of its physical plant. The amount of time that it takes to get to the long run varies from firm to firm. 2.2 Explicit costs involve spending money. Implicit costs are nonmonetary opportunity costs, such as the wages that the owner of a firm could have earned if he or she worked for someone else.
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Dr. Seiji Steimetz ECON 101 Department of Economics California State University, Long Beach Page 2 of 10 Problems and Applications 2.3 Wage costs are variable if firms increase the number of workers they hire as they increase output. If a publisher decides to increase the quantity produced of any book it publishes, it does not need to hire any more editors, designers, or other employees (although the firm that actually prints the books may have to). Even if the publisher decides to publish additional titles, it may not need to hire more editors or other employees because these employees usually work on several titles at the same time. Only if the publisher intends to significantly increase the number of titles it publishes will it hire more employees. Therefore, publishers typically consider their wage costs to be fixed costs, rather than variable costs. For many
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problem set answers 10 - Dr. Seiji Steimetz ECON 101...

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