Economics Homework Twelve Answers - Student Ten

1. A monopoly is one seller without any competitors. What is a "monopsony"? Many sellers with one buyer.

Correct.

2. Define, in your own words, what a "production possibilities curve" is. The production possibility's curve is a graph showing two goods and the opportunity cost for making more of one and less of another.

Superb definition! May use as a model.

3. Review: how is the elasticity of demand for labor related to the price elasticity of demand for the product of that labor? If the item is elastic so will be the demand for labor.

Right.

5. Look again at Figure A. What is the opportunity cost of shifting production from B to C? If the cars are at 250 at point C (I could not read it) then the opportunity cost is 350.

Right. (Sorry about the fine print, but congratulations on doing the best with it!)

6. Review: explain again what AFC, AVC and ATC are, and how they relate to each other. When should a firm shut down in the short run? Average fixed costs are all the costs left with no output, average variable costs are costs that can be changed depending on output, and avrage total costs are all the costs added together. When total costs fall below total revenue a firm will be forced to go out of business.

Need to describe and understand how average costs relate to total costs (divide by output). Also, the question asked about the short run condition for going out of business. It is when P<AVC. (Minus 2).

7. What is needed to reach point D in Figure A? (In other words, what causes a production possibilities curve to shift outward?) A major advance in technology.

Excellent.

58/60, with some superb answers. Congratulations!--Andy Schlafly 20:43, 13 December 2009 (EST)