Week 2 Suggested Answers to Questions and Problems
NOTE: Please pay particular attention to the way that answers are stated, because these are the kinds of
statements that will be looked for in the quizzes and final exam. In general, all answers need to be
supported with appropriate reasoning.
Chapter 7 Question 4
Chapter 7 Question 11
11. Average fixed cost.
Chapter 7 Question 12
12. If marginal cost is less than average total cost, then average total cost is falling and vice versa. A
baseball player hitting .333 (gets a hit one-third of the time on average) will see his average rise when he
gets a hit and fall when he does not. If the average income of your class is $15,000 (some people work),
and Tom Cruise decides to take a refresher course in economics and joins your class, average income
rises, and vice versa if someone with no income joins the class.
Chapter 8 Question 1
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