ECON
ECON100A_13

# ECON100A_13 - ExtraO.H(andReviewSession)before Midterm2...

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1/4/2008 1 Extra O.H. (and Review Session) before  Midterm 2 REVIEW SESSION FOR MIDTERM 2: CHEM 1179, Sat. 11/14/09, 12:00P-2:00P Extra O.H posted on Webpage You can attend any T.A.s O.H. No Wednesday section on Vet’s Day Students with Wednesday section may attend other sections this week, space permitting I will go over much of PSet 6 in class Thurs. Formula sheet posted with review questions Course Eval Survey posted on webpage Anonymous Would help if you take 2 minutes and fill it out

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1/4/2008 2 Review Short Run Cost
1/4/2008 3 Question 1 The wage is \$2/hr and rental rate on capital is \$1/hr. Based on the figure on the right, what is the short run total cost of producing 24 units of output in the short-run, given 7 units fixed capital? L K Q=20 Q=24 7 2 4 6 10

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1/4/2008 4 Question 2 Holding constant w, r and K, SAFC(Q,w,r,K): A. Always rise as Q rises B. Always falls as Q rises C. Always stay the same as Q rises D. Could either rise or fall as Q rises
1/4/2008 5 Question 3 What does the RED curve depict? A. STC B. SVC C. SATC D. SMC E. SAVC Q \$/unit

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1/4/2008 6 Theory of Cost Long Run
1/4/2008 7 Time Horizon Very short short long run run run L, K K fixed L, K fixed L variable variable

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1/4/2008 8 Isocost Line Definition: Set of input bundles that cost the same, given w and r. Say total cost is TC 0 . If use only labor then wL 0 = TC 0 → L 0 = TC 0 / w If use only capital then rK 0 = TC 0 → K 0 = TC 0 / r L K TC 0 /r TC 0 /w
1/4/2008 9 Question What is slope of an isocost line?

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• Fall '07
• Babcock
• Economics, Economics of production, long run cost, =Q L*

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