經(jīng)濟(jì)學(xué)基礎(chǔ)Chap005

1、answers to questions for discussion and problemsquestions for discussion1. is your school currently producing at capacity (i.e., teaching as many students as possible)? what considerations might inhibit full capacity utilization?lo: 1aacsb: analyticbt: createthere may be empty seats in your classroo

2、m that indicate unused capacity. although it would be impractical to offer classes around the clock, capacity utilization has increased as many schools have added early morning, night, and weekend classes to traditional monday through friday daytime classes. it is difficult to enroll the exact numbe

3、r of students to fill up each classroom for every course and even if it were possible, some students would still drop out of specific classes or even the school. due to the nature of our educational system, these students cannot be replaced during the middle of a semester.2. what are the production

4、costs of your economics class? what are the fixed costs? the variable costs? what is the marginal cost of enrolling more students?lo: 3aacsb: analyticbt: analyzethe fixed costs are the costs of providing the classroom and its equipment, some level of utilities, and the prorated share of the universi

5、ty's infrastructure attributed to this class. the variable costs include the cost of the instructor, materials (chalk or markers, handouts), and some additional utilities. the marginal cost of enrolling one more student is nearly zero as long as there is a seat available in the classroom.3 suppo

6、se you set up a lawn-mowing service and recruited friends to help you. would the law of diminishing returns apply? explain.lo: 2aacsb: analyticbt: analyzein the short run, yes. as more and more friends helped, there would be capital constraints such as a limited number of lawn mowers, rakes, etc. sh

7、aring the tools reduces each worker's productivity. also they might tend to get in each other's way and bicker and fuss. the result would be to decrease the output of each added worker over that of the previous worker.4. what are the fixed costs of (a) a pizza shop, (b) an internet service p

8、rovider, (c) a corn farm? who needs the highest sales volume to earn a profit?lo:3aacsb: analyticbt: create(a) the fixed costs of a pizza shop include rent on the building (even if they own the building there is an opportunity cost)，insurance some minimal level of utilities (for example, for securit

9、y and signage), ovens and other equipment, delivery cars, etc.(b) the fixed costs of an internet service provider include rent on the building, the computer servers, the software necessary to provide access to the internet and a dedicated telephone line.(c) the fixed costs of a corn farm include the

10、 land, buildings, tractors, combines, and other equipment.whichever business has the highest fixed costs needs the highest sales volume to earn a profit.5. owner-operators of small gas stations rarely pay themselves an hourly wage. does this practice reduce the economic cost of dispensing gasoline?l

11、o: 5aacsb: analyticbt: createno, this practice does not reduce the economic cost of dispensing gasoline. it can change the accounting cost, but not the economic cost. economists focus on opportunity costs; they include an allowance for how much the owner could have earned in an alternative job.6. in

12、 the news wire on page 99, why did mpp fall to zero? what was the opportunity cost of those surplus workers?lo: 2aacsb: analyticbt: evaluateas more workers are hired in a given plant, mpp declines. if too many are hired, mpp may even fall to zero, or less. in this case, the headline tells us that th

13、ere were surplus, i.e., too many, workers. the opportunity cost to the state of the surplus workers was what they could have done elsewhere had they not hired them. or, this could include purchasing equipment so that the productivity of the work force would increase.7. what role do expectations play

14、 in the production and investment decisions described in the news wire on page 107?lo: 3aacsb: analyticbt: evaluateaccording to the news wire, nissan is expanding the production at its barcelona plant by hiring an additional 1,000 workers. nissan plans to create a new compact car and increase output

15、 of a pickup truck already being manufactured there. this production decision 一 a focus on the short-run use of existing facilities 一 is based on the expectation that consumers will be willing and able to purchase these vehicles. fiat, on the other hand, is looking for a whole new location for produ

16、ction. they are considering opening a plant to manufacture the brand's sport-utility vehicles in russia in an attempt to expand jeep's global reach. this investment decision 一 a focus on the long-run acquisition of productive facilities 一 is an attempt to expand jeep's global reach. this

17、 decision is based on the expectation (as with the nissan example) that consumers will be willing and able to purchase these vehicles.8. why does marginal physical product decline at a fast-food outlet (e.g. mcdonald) when more employees are hired? what are the fixed input constraints that limit wor

18、ker productivity?lo: 2aacsb: analyticbt: evaluatethe law of diminishing returns states that the marginal physical product of labor declines as more of it is employed with a given quantity of other fixed inputs. for example, if mcdonald's has one ice cream machine and 6 employees, one of which is

19、 a cook, another that is a cashier, and the other four prepare the side dishes including the ice cream, space will be tight and still only one ice cream can be prepared at one time. this "crowding" reduces marginal physical product. hiring another worker might not increase ice cream produc

20、tion.fixed input constraints at an establishment such as mcdonalds would include food dispensers such as ice cream machines, cola dispensers, and deep fat fryers. a limited number cf grills, microwaves, and cash registers would also be considered limiting inputs. finally, the counter space and space

21、 behind the counter also has the potential to place considerable constraints on worker productivity.9. why doesn't maximum output generate maximum profits?lo: 3aacsb: analyticbt: evaluatepeople who supply goods and services want to make a profit from their efforts. in economic terms, profit is t

22、he distance between total revenues and total economic costs: profit = total revenue - total cost. for example, if the total revenue at a jeans factory was $300 per day and total cost is $245 per day, the profit would be $55 per day. now, if at maximum output, the jean factory's total revenue inc

23、reased by $30, but the total cost increased by $60 in order to create maximum output then, $330 - $305 = $25 of profit.maximum output does not generate maximum profits, in the case above profit decreased with an increase in output. generally, costs increase as output increases. indeed, producing mor

24、e may in fact lead to losses rather than any profit at all.10. policy perspectives if cap讓al investment ceased, what would happen over time to worker productivity and living standards?lo: 1aacsb: analyticbt: evaluatethe u.s. labor force contmues to grow by more than a million workers each year. capi

25、tal investment stimulates each and every worker's productivity. if capital investments don't keep pace or, even worse, they cease, these added workers would strain production facilities. the law of diminishing marginal product (decreased worker productivity) would push wages lower and reduce

26、 living standards.problems1. (a)what is the marginal physical product of each successive worker in figure 5.1? for which worker is marginal physical product(b) first diminishing?(c) zero?answers:(a) workermpp115219310445261708-4(b) worker number 3(c) worker number 7 explanation:labor input(worker/da

27、y)012345678output(jeans/day)01534444850515147mpp015191042104(a) marginal physical product (mpp) is the change in total output associated with one add讓ional unit of input. the mpp for the first worker is 15 (= 15 一 o). the mpp for the second worker is 19 (= 34 一 15), and so on.(b) the relative scarci

28、ty of other inputs (capital and land) constrains the marginal physical product of labor and eventually causes it to diminish. in this case the mpp first diminished with the third worker; the mpp of the third worker is in fact smaller than the mpp of the second worker.(c) according to the table devel

29、oped above, the mpp of the seventh worker is zero.lo 05-02topic: capacity constraints: the production function aacsb: analyticblooms: level 3 apply2. (a) compute average fixed costs and average variable costs in figure 5.3 for all rates of output.at what rate of output(b) are average fixed costs the

30、 lowest?(c) are average variable costs the lowest?(d) is average total cost the lowest?(a)avavrat© of outputfixed costsvariable coststotal costs$120$0$120h0fixed tsaverage variable costs(b) rate of output = 51(c) rate of output = 20(d) rate of output = 40$20.5016.3313.5012.0011.7513.4014.76expl

31、anation:(a) average fixed cost is fixed cost divided by output. for example at point i average fixed cost is $12 (= $120/10 pairs), at point j average fixed cost is $8.00 (= $120/15 pairs), and so on. average variable cost is determined in the same way; variable cost divided by output. in this case,

32、 at point i average variable cost is $8.50 (= $85/10 pair), at point j average variable cost is $8.33 (= $125/15 pairs), and so on.(b) according to the table, average fixed costs are lowest at point o where the rate of output is 51 pairs and average fixed costs of $2.35.(c) average variable costs ar

33、e lowest at point k where the rate of output is 20 pairs and average variable cost is $7.50.(d) average total costs are lowest at point m where the rate of output is 40 pairs and average total cost is $11.75.lo 05-03topic: costs of production aacsb: analyticblooms: level 3 apply3. (a) complete the f

34、ollowng table.marginal costaveragetotal costrate of total costoutput0$1301 $1402 $1603 $1904 $2405 $310(b) use the information to plot the marginal cost and average total cost curves on the same graph.(c) what output has the lowest per-unit cost?(d) what is the value of fixed costs?(a)rate of output

35、 o12345total cost0000203 4 6 9 m5111112 co 、>gugmcucugmv/mmarginal costaverage total cost$10$140$20$80$30$63$50$60$70$62acned) iso。1501401301201101009080706050403020100cost curvesrate of output (units per time period)(b)(c) rate of output = 4(d) fixed costs = $130explanation:(a) marginal cost is

36、the increase in total cost associated with a one-unit increase in production. the first urdt of output has a marginal cost of $10 (= $140 - $130), the second unit has a marginal cost of $20 (= $160 - $140), and so on. average total cost (atc) is total cost divided by the quantity produced. in this c

37、ase, atc for the first unit is $10 (= $140/1), atc for the second unit is $80 (= $160/2), and so on.(b) marginal cost and average total cost are plotted with “costs” on the vertical axis and “rate of output” on the horizontal axis. one point along the marginal cost curve is at 1 unit with marginal c

38、osts of $10. a second point along marginal cost is 2 urdts and $20 marginal costs. average total cost is plotted in the same way. one point along the average total cost curve is at 1 unit with average total costs of $140. a second point along the average total cost curve is 2 units and $80 average t

39、otal costs.(c) atc is at a minimum at 4 units of output and a per-unit cost of $60.00-(d) fixed costs are the costs of production that do not change when the rate of output is altered, e.g., the cost of basic plant and equipment. fixed costs are the costs that exist when output is zero, in this inst

40、ance, $130.lo 05-03topic: costs of productionaacsb: analyticblooms: level 4 analyze4. suppose the mythical tight jeans corporation leased a second sewing machine, giving it the following production function:number ofworkers012345678quantity ofoutput01036566874767674(a) graph the production function.

41、(b) on a separate graph, illustrate marginal physical product. at what level of employment does(c) the law of diminishing returns become apparent?(d) mpp hit zero?(e) mpp become negative?answers:production function(aepa)d s-(6d) indlno snvalabor input (machine operators per day)(a)marginal physical

42、productlabor input (machine operators per day)(aep 唇 s-(6d) indlno snva(b)(c) worker number 4(d) worker number 7(e) worker number 8explanation: number ofworkers012345678quantity ofoutput01036566874767674mpp101620126202(a) the production function is plotted with uquantity of output” on the vertical a

43、xis and "number of workers" on the horizontal axis. one point along the production function is 10 pairs of jeans and 1 worker (10,1). a second point along the function is 36 pairs of jeans and 2 workers (36, 2). the rest of the production function is plotted in the same manner.(b) the marg

44、inal physical product curve is plotted with "marginal physical product” on the vertical axis and "number of workers on the horizontal axis. one point along the mpp curve is 10 pairs of jeans and 1 worker (10,1). a second point along this curve is 16 pairs of jeans and 2 workers (16, 2).(c)

45、 the law of diminishing returns states that the marginal physical product (mpp) of a variable input declines as more of it is employed with a given quantity of other (fixed) inputs- according to the table, the mpp declines with the fourth worker. an mpp of 12 for the fourth worker is less than an mp

46、p of 20 for the third worker.(d) according to the table provided，mpp is zero for the seventh worker.(e) the mpp for the eighth worker is -2.lo 05-01topic: capacity constraints: the production functionaacsb: analyticblooms: level 4 analyze5. suppose the mythical tight jeans corporation leased a secon

47、d sewing machine, giving it the following production function:number ofworkers012345678quantity of output01036566874767674using the data above and a price of $20 per pair of jeans; compute the value of the mpp (price x mpp) of(a) the third worker.(b) the seventh worker.answers:(a) $400(b) $0explanat

48、ion:number ofworkers012345678quantity ofoutput01036566874767674mpp101620126202(a) the value of the mpp is price times the mpp. in this instance, the mpp for the third worker is 20 and the price per pair of jeans is also $20, yielding a value of $400.(b) the mpp for the seventh worker is zero which y

49、ields a value of $0 (= o x $20).lo 05-03topic: costs of productionaacsb: analyticblooms: level 3 apply6. using figure 5.3 as a guide, compute total profits at a price of $15 per pair of jeans and output of (a) 40 pairs, (b) 50 pairs.answers:(a) $130(b) $80explanation:(a) total profit is equal to total revenue 一 total cost. in this case total revenue is equal to $600 (= $15 per unit x 40 units) and total cost is $470. thus, total profit is $130.(b) with an output of 50 units, total revenue is $750 (= $15 per unit