Comm220 Ch7 Quick Quiz

Comm220 Ch7 Quick Quiz - Q3 No, AVC can be either...

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CHAPTER 7 – A&SWERS TO THE QUICK QUIZ QUESTIO&S Q1 a. True. No monetary transaction, no accounting cost. Economic cost is positive, reflecting the opportunity cost of the owner’s time b. True. There may be some opportunity costs that were not fully realized as explicit monetary costs, which may cause the economic profit to become negative. c. False. The value of the worker’s time is unlikely to be zero, which makes the opportunity cost > 0. Q2 LRAC curve slopes downward then becomes horizontal.
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Unformatted text preview: Q3 No, AVC can be either increasing or decreasing. Q4 No, if the capital/labour ratio changes as output is increased. Q5 a. C(q) = 5000 + 500q AC(q) = 5000/q + 500 b. Very large. Q6 a. C(q) = 50000 + 2200q AC(q) = 50000/q + 2200 MC(q) = 2200 AC will decrease as q increases. b. L = 40 AC(q=1000) = 2250 c. K/L = 1/2 (i.e., K = L/2 or L = 2K) d. L = 20 K = 10 AC(q=1000) = 2200 e. C(q) = 6,324.56q 1/2 + 2000q...
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This note was uploaded on 01/22/2012 for the course COMM 220 taught by Professor J.garon during the Spring '08 term at Concordia Canada.

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