Mr Hudson notes that if he produces 10 pairs of shoes per day his average fixed

Mr hudson notes that if he produces 10 pairs of shoes

This preview shows page 31 - 34 out of 42 pages.

10.Mr. Hudson notes that if he produces 10 pairs of shoes per day, his average fixed cost (AFC) is $14 and his marginal cost $8; if he produces 20 pairs of shoes per day, his MC is $15. What is his AFC when output is 20 pairs of shoes per day? A) $5B) $15C) $8D) $7Feedback: If the average fixed cost on 10 pairs is $14, then total fixed cost is 10 x $14 =$140. As fixed cost does not change with output, then at 20 pairs, you simply divide $140 by 20, which gives us $7/pair. Table for Individual Question Feedback Points Earned: 0.0/1.0
Image of page 31
Correct Answer(s):D Lesson 4 1.The difference between the amount consumers would be willing to pay and the amount they actually pay for a good is called Table for Individual Question Feedback Points Earned: 0.0/1.0 2.A sugar beet famine reduces the size of the sugar crop by half, and at the same time candy (made form sugar) is shown to make you smarter. This will result in Table for Individual Question Feedback Points Earned: 0.0/1.0 3.Which of the following is least likely to increase the demand for new tires?
Image of page 32
Table for Individual Question Feedback Points Earned: 0.0/1.0 4.As societies become wealthier, they tend to eat more meat. This means that meat is A) an inferior goodB) an Atkins goodC) a normal goodD) a superior goodFeedback: A normal good is one with a positive income elasticity - as somebody gets wealthier, their consumption of the good increases.Correct Answer(s):C Table for Individual Question Feedback Points Earned: 0.0/1.0
Image of page 33
Image of page 34

You've reached the end of your free preview.

Want to read all 42 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture