Economics Homework Twelve Answers - Student Three

Seth P.

1.A monopsony is one buyer.

Correct!

2.A production possibilities curve is a way to graph all the different possibilities you have for spending your time, resources and energy.

Not quite. The production possibilities curve (or "frontier") is limited to the production of output (goods or services), and the trade-off among them.

3\.

OK, a free pass here.

4.No, I don't think government policy should give high priority to the Lorenz curve. A Lorenz curve addresses the issue of equal distribution of wealth in a society. No, I don't think that should be a high priority of government economic policy because if they do this it will cause more problems than it will fix.

Excellent!

5.On figure A, shifting production from B to C would make them lose money because they are above the demand.

No, this has nothing to do with demand. Please take another look at this and review the model answers when ready concerning the production possibilities curve. (Minus 2).

6.AFC, average fixed cost, is the fixed cost divided by the output. AVC, average variable cost, is the variable cost divided by the output. ATC, average total cost, is total cost divided by output. AFC and AVC when added together should equal the ATC. A firm should shut down in the short run when their ATC is greater than their revenue.

Superb until the last sentence. Revenue is price times quantity, while ATC is TC divided by quantity. So ATC needs to be compared to Revenue divided by quantity, which is price. When P is less than ATC, then it should shut down. You were almost right in your last sentence. (Minus 1).

7.A production possibilities curve would shift outward if someone made a lot more factories and could produce more, or if there was an advancement in technology which allowed factories to make way more stuff than they did before.

Superb!

8.In figure C, total revenue is maximized at point D.

Nope. It's maximized at quantity set by point E. If you had explained your answer I could give you more partial credit. (Minus 2). See model answers.

9\.

Free pass.

10.No, I would not hire the tenth worker because I would lose $4/hr.

Right!

11.In comparative advantage they are comparing the one countries two goods to see which one they can make more efficiently, so they can figure out what they are best at making. Then trade with a different country for other stuff they are not as good at making.

Use the possessive: "the one country's two goods." Good explanation, but I'm not sure this fully captures what is being compared. Full credit, but check the model answers when ready.

85/90. Good work on a challenging assignment!--Andy Schlafly 21:23, 12 December 2009 (EST)