Econ1-Fall2010-PS6 - Econ 1 PS#6 Supply Fall 2010 1 Many...

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Econ 1 PS #6: Supply Fall 2010 1. Many small boats are made of fiberglass, which is made from crude oil. a. Assuming that the amount of fiberglass that a firm uses can be varied in the short run and that other factors of production are fixed, draw a standard set of cost curves for a firm in the boat industry. Clearly label the average total cost curve, the average variable cost curve, the average fixed cost curve and the marginal cost curve. b. Now suppose that the price of crude oil rises, on your diagram show what happens to the cost curves of an individual boat-making firm in the short run. 2. Consider the following cost curves for a given firm. a. On the above diagram, carefully sketch and label an average variable cost curve (AVC) and an average total cost curve (ATC). b. Suppose that the price of labor goes up, on the above picture sketch what, if anything, will happen to the marginal cost curve as a result of this wage increase. c.
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This note was uploaded on 06/15/2011 for the course ECON 1 taught by Professor Aben during the Fall '07 term at City College of San Francisco.

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Econ1-Fall2010-PS6 - Econ 1 PS#6 Supply Fall 2010 1 Many...

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