Economics Homework Twelve Answers - Student Sixteen

AmandaS.

1. A monopoly is one seller without any competitors. What is a "monopsony"?

A monopsony is one buyer who faces many sellers. It is a state in which demand comes from only one source.

Correct!

2. Define, in your own words, what a "production possibilities curve" is.

A production possibility curve is used to determine the amounts of two goods or services that an economy can produce by transferring resources from one good or service to the other.

Superb, will probably use as a model.

4. A Lorenz curve shows the degree of inequality that exists in the distributions of two variables, and is often used to illustrate the extent that income or wealth are distributed unequally in a particular society. I believe that the Lorenz curve is very important but should not be a high priority for the government.

Good.

5. Look again at Figure A. What is the opportunity cost of shifting production from B to C?

350 cars were lost.

Correct!

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?

AFC (Average Fixed Cost) is the total fixed costs divided by the quantity, AVC (Average Variable Cost) is the number of units produced and the ATC (Average Total Cost) are all of the costs added together. In the short run the firm should shut down when revenue falls below the ATC.

Partly correct. This is incorrect: "AVC (Average Variable Cost) is the number of units produced." Instead, AVC is the total variable cost divided by the number of units produced (perhaps you meant to say that!). In the short run the firm should shut down 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?)

When the overall number of workers or the investment capital increases, more can be produced.

Correct!

58/60. Well done!--Andy Schlafly 21:59, 13 December 2009 (EST)