Economics Homework Thirteen Answers - Student Eight

Economics Homework Thirteen

Duncan B.

1. B is true: AFC is fixed costs divided by total output: FC/Q. As Q increases, the result becomes less.

Excellent, with a superb, concise explanation.

2. This is the result of free trade: protectionism (discreet government regulation to protect home producers and consumers) would regulate to keep jobs at home.

Right.

3. The primary responsibility of the Federal Reserve Bank is to regulate the amount of interest charged by banks. It also can regulate the amount kept in a banks to guard against a run, and can sell and buy government securities.

Terrific.

4. Your good must be price inelastic, because you can raise price without significantly affecting demand.

Correct again!

5. (c) is the answer.

Correct.

6. One reason that prices are higher is that supply has decreased.

Superb and concise.

8. When P=MC, you have no profits: each good you produce sells for exactly the same amount. (In other words, you do not get your fixed costs back.) In monopolistic competition, firms can raise the price above marginal cost, because they have some market power. Average total cost includes all costs, including fixed costs; thus you get your fixed costs back.

Excellent.

10. Perhaps a good substitute would be "selective trade."

Clever. Your term could catch on.

11. Keynesian economics is the view that government interference is good for the economy: the more the better.( It is the economic basis for Communism.) It is not nearly as productive as a free market economy.

Excellent, but note that historically communism came first. Perhaps there is a spectrum, with communism on the left side and then, as one moves right, there is Keynesian economics and then the free market.

Terrific homework, perhaps the best in the entire class all year. 80/80. Congratulations!--Andy Schlafly 23:18, 19 December 2009 (EST)