Economics Homework Twelve Answers - Student Six

DeborahB.

1\. A monopoly is one seller without any competitors. What is a "monopsony"? A monopsony means only one buyer. One buyer holds a monopoly on all purchases.

Correct!

2\. Define, in your own words, what a "production possibilities curve" is. A Production possibilities curve is the wide variety of items the world can produce.

Not bad, but too general. The curve shows the trade-off in production of certain goods by a nation or firm (not the "world"). (Minus 1).

3\. Review: how is the elasticity of demand for labor related to the price elasticity of demand for the product of that labor? When the public has a large demand for a product being made and the demand increases, or when the demand decreases and the public has no need for it, the company making the product in turn increases or decreases their product of labor.

Not precise. See model answers. (Minus 1).

5\. Look again at Figure A. What is the opportunity cost of shifting production from B to C? $100.

$100 ... of what? It's more than that, and it is necessary to identify a good. (Minus 2). See model answers when available.

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, which is the total fixed cost per unit of output, found by dividing total fixed cost by the quantity of output. AVC: Average Variable Cost, is the total variable cost per unit of output, found by dividing total variable cost by the quantity of output. ATC: Average Total Cost is the sum of all the production costs divided by the number of units produced. A firm should shut down in the short run when AVC>P.

Excellent! Could use as a model answer.

7\. What is needed to reach point D in Figure A? (In other words, what causes a production possibilities curve to shift outward?) If the overall number of workers or investment capital increased, then you could produce more of everything, which would make the production possibilities curve shift outwards. An improvement in technology would also have the same affect.

Superb!

56/60. Good work on a difficult assignment.--Andy Schlafly 20:00, 13 December 2009 (EST)