Lec1-Questions-Ch2 - ECMC41 - WEEK #1 (Ch2) Recommended...

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ECMC41 - WEEK #1 (Ch2) – Recommended Problems Textbook questions Ch2 Q1. Distinguish between returns to a variable factor of production (input), and returns to scale. Q2. Explain why a firm’s short-run average cost function may be U- shaped. Explain why a firm’s long-run average cost function may be U-shaped. Q3. Explain why a profit maximizing firm would never operate on the portion of its demand curve where the own price elasticity 1 of demand is below one. What is the name of this region of the demand curve? Q4. Sketch a typical total product function for a firm with one variable factor of production (labour). At what point on the total product function is the marginal product of labour at a maximum? At what point on the total product function is the average product of labour at a maximum? Q5. Suppose a firms short-run production and costs are as described below in Table 1 . A) Does the Law of Diminishing Returns apply to this firm? Explain why
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This note was uploaded on 02/05/2011 for the course ECM 41 taught by Professor Jackparkinson during the Summer '10 term at University of Toronto- Toronto.

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Lec1-Questions-Ch2 - ECMC41 - WEEK #1 (Ch2) Recommended...

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