10-Discussion Questions

10-Discussion Questions - Lecture 10: Technology and...

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Lecture 10: Technology and Production (II) Suggested questions and exercises (Pindyck and Rubinfeld, Ch.7). Questions: 3, 7, 9 Exercises: 3, 4, 7, 9, 11 QUESTIONS 3. 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. 7. Assume the marginal cost of production is increasing. Can you determine whether the average variable cost is increasing or decreasing? Explain. 9. If the firm’s average cost curves are U -shaped, why does its average variable cost curve achieve its minimum at a lower level of output than the average total cost curve? EXERCISES 3. A firm has a fixed production cost of $5,000 and a constant marginal cost of production of $500 per unit produced. a.
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This note was uploaded on 11/30/2010 for the course ECON 251 taught by Professor Tontz during the Fall '10 term at USC.

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10-Discussion Questions - Lecture 10: Technology and...

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