ECON2103 Suggested Solutions to Problem Set (7)
Chapter 13
Problems and Applications
Question 2
(a) opportunity cost
(b) average cost
(c) fixed cost
(d)
(e)
(f)
variable cost
total cost
marginal cost
Question 3
Here is the table of costs:
Workers
(d)
(e)
ECON2103 - Suggested Solutions to Problem Set (1)
Chapter 1
Questions for Review
Question 3
The marginal benefit of a glass of water depends on your circumstances. If you have just run a marathon
or you have been walking in the desert sun for three hours,
ECON2103 - Suggested Solutions to Problem Set (2)
Chapter 3
Questions for Review
Question 1
PPF will be linear if the opportunity cost of producing a good is constant no matter how much of that
good is produced. (Inputs are not specialized)
Question 8
Eco
ECON2103 - Suggested Solutions to Problem Set (4)
Chapter 5
Problems and Applications
Question 5
Billy could be right. If demand increases, but supply is perfectly inelastic, equilibrium price will rise but
the equilibrium quantity will remain the same.
V
ECON2103 - Suggested Solutions to Problem Set (6)
Chapter 6
Problems and Applications
Question 5
Reducing the payroll tax paid by firms and using part of the extra revenue to reduce the payroll tax paid
by workers would not make workers better off, becaus
ECON2103 - Suggested Solutions to Problem Set (3)
Chapter 4
Questions for Review
Question 1
A competitive market is a market in which there are many buyers and many sellers of an identical
product so that each has a negligible impact on the market price.
ECON2103 Suggested Solutions to Problem Set (9)
Chapter 17
Problems and Applications
Question 2
(a) If there were many suppliers of diamonds, P = MC, so the quantity would be 12,000.
(b) With only one supplier of diamonds, quantity would be set where MC =
ECON2103 Suggested Solutions to Problem Set (10)
Chapter 10
Problems and Applications
Question 1
The Club conveys a negative externality on other car owners because car thieves will not attempt to steal
a car with The Club visibly in place. This means tha
ECON2103 Suggested Solutions to Problem Set (8)
Chapter 15
Problems and Applications
Question 2
The following table shows revenue, costs, and profits, where quantities are in thousands, and total
revenue, total cost, and profit are in millions of dollars: