Economics Homework Thirteen Answers - Student Three

Seth P.

1\.

OK.

2.People losing their jobs to workers in China is the result of “free trade”.

Correct.

3.One of the primary responsibilities of the Federal Reserve Bank is to protect the banking system against collapse.

Right.

4.I decided that I can increase my revenue by increasing my price. Therefore my good must be price elastic.

Nope, price inelastic. Recall that demand does not decrease much when the price is increased for a price inelastic good. That means revenue (PxQ) increases when the price increases, provided the good is price inelastic. (Minus 2).

5\. A monopolistic competitive firm has the following characteristic that is lacking for a perfectly competitive firm: c. P > MC. This is because the competitors can raise their price but people will still buy their product because they can't just go to a different place and buy exactly the same thing.

Superb!

6.You can do things more efficiently in the long run than you can in the short run, because the long run is a variable cost the airline is able to change things and thus accommodate a lot more people so the tickets are cheaper. But the short run is a fixed cost so the airline can't change stuff so the tickets are more money.

Excellent explanation from the airlines' perspective!

7\.

OK.

8.In long-run equilibrium, the price charged in monopolistic competition is greater than marginal cost but equal to average total cost because of product differentiation. When a company has its own product that no one else has, it can raise the price above marginal cost until it reaches average total cost. The company wants to keep its price neutral so it does not make a profit so other companies won't come in and try to undersell it. The company stays in business because average total cost includes the cost of everything, even opportunity costs.

Superb!

9\.

OK.

10\. A better name for “protectionism” could be patriotism because they are trying to protect America's jobs and economy so that makes them patriotic.

Fantastic, could be a model answer.

11.Keynesian economics is a version of economics that says that government interference is a good thing that makes the economy better and creates more jobs and things like that. My view of it is that if a government followed Keynesian economics, the country that government is in charge of would collapse in a few years. Because if the government took the time to do the research, they would realize that government control just makes things worse instead of making things better like Keynesian economics says it does.

Excellent!

78/80. Congratulations on a strong ending to your great homework throughout the entire course!--Andy Schlafly 19:21, 19 December 2009 (EST)