Economics Homework Thirteen Answers - Student Ten

1. Which is true about the average fixed costs (AFC) of a firm?

(a)a firm can eliminate these costs by shutting down in the short run. (b) as output increases, AFC decreases (c) as output increases, AFC increases (d) AFC is part of average variable costs

Briefly explain your answer. The answer is (a) because all the others are false

Nope. (b) is correct. See model answers when available. (Minus 2)

2. Some politicians complain about how people are losing their jobs to workers in China. Is this problem the result of "free trade" or "protectionism"? free trade

Correct!

3. What is one of the primary responsibilities of the Federal Reserve Bank? keeping the banks from failing

Correct again!

4. Review: Suppose that after completing this course, you start a new company. In your first year, you "broke even" (had zero profits), and in your second year you want to increase your revenue and profits. After careful study of your market, you decide that you can increase your revenue by increasing your price. Therefore your good must be price elastic/inelastic (choose one). inelastic

Right!

6. You can go on www.orbitz.com and watch the price of airline tickets change from day-to-day. If you pick fixed dates of travel, such as Jan. 15 to fly somewhere and Jan. 18 to return, then you will notice that the closer you get to those dates, the higher the price of the ticket usually is. In other words, the earlier in advance that you can buy a ticket, the cheaper it usually is. Explain how this illustrates a basic difference between long run and short run costs. costs are always cheaper in the long run

Good analysis.

48/50. Great ending to good homework throughout the course. Congratulations.--Andy Schlafly 23:29, 19 December 2009 (EST)