HW11S_302 - Econ 302- Solution to Problem Set 11 Spring...

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Econ 302- Solution to Problem Set 11 Spring 2010-Ali Toossi Due: Wednesday, April 21 Chapter 10: Questions for review Answer to question 1. The law of diminishing returns implies that eventually the TVC curve will begin to rise at an increasing rate Answer to question 2. As soon as diminishing returns set in, the MC curve will slope upward. Answer to question 4. If MC is less than average costs (total or variable), then each additional unit produced should pull down average cost. If MC is more than average costs (total or variable), then each additional unit produced should increase average cost. If you have an average score in this class of 90 and your next test (the marginal test) score is 85, your average is pulled down. If the marginal test score is 95, the average for the class is pulled up. Answer to question 5. We have decreasing returns to scale. Chapter 10: Problems Answer to problem 1. Quantity Total Fixed Variable ATC AVC AFC MC of output cost cost cost ___________________________________________________________ 0 24 24 0 -- -- -- _____ ______________________________________________________________ 16 1
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HW11S_302 - Econ 302- Solution to Problem Set 11 Spring...

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