Economics Homework Seven Answers - Student Eight

Economics Homework 7

Duncan B.

1. The four elements of perfect competition are: perfect knowledge of the market, perfect substitutes, perfect mobility of resources, and many buyers and sellers.

Correct.

2. Competition with someone who you really want to beat can motivate you to try harder to beat them, or be better than them. In several of the classes before this one, I competed very hard with other students on the exam, which likely helped me to do better.

Superb!

4. The converse of Gresham's Law is not necessarily true with conversation; it depends on the people in the conversation.

OK, good point.

5. Total cost is the entire costs your firm sustained from the time you started, including the building of factories, purchase of machines, advertising, wages, production, and many others. Average cost is the total cost divided by number of goods produced (TC/Q). Marginal cost is the amount to produce one more unit.

Right.

6. The total loss is ($15x85)+(50x$20)+(10x$25)+(5x$30)=$2675.

Nope ... and the question asked about "consumer surplus," not "total loss" (I'm sure what "total loss" would be). See model answers when available Sunday night. (Minus 2).

7. There is not perfect competition between public schools and homeschools, for several reasons. First, the infamous "socialization:" public school students often see more of people of the same age. Second, few homeschools have access to organized teams for multiple sports (and typically public schools do not allow homeschoolers on their teams.) Finally, few homeschools have access to complicated laboratories and workshops for science.

Good points, but there are many disadvantages to public school also. A student cannot take courses above grade level; a student must complete much work that is a waste of time, or even incorrect; and a student gets caught up in a culture that is going in the wrong direction, with many students failing to graduate and a very low percentage going to good colleges.

8. Competition is the state existing when two nearly identical firms share the same market, promoting maximum efficiency.

Good definition, could use as a model. Actually, looking at this a second time, I don't agree with the phrase "two nearly identical firms." The firms can be quite different internally. Competition is defined by the nature of the market, not the nature of the firms (except they must have equal access to resources). Good answer anyway.

9. Without the minimum wage, when the supply of labor increased the prices of labor would drop. Because there is a minimum wage, there is no result.

"there is no [such] result" ... there is a result: higher unemployment. (Minus 1).

10. The firm has no profit or loss when Q=0, because they are not producing any goods or paying any people. The firm is not profitable.

But state the loss: FC (fixed cost). (Minus 1).

86/90. Good work, get ready for the midterm exam next class!