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Comm220 Ch7 Quick Quiz

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

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CHAPTER 7 – Aglyph1197SWERS TO THE QUICK QUIZ QUESTIOglyph1197S 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.
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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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