2. Using cheddar cheese, explain in two sentences or fewer the following: a. Income Effect b. Substitution Effect c. Law of Diminishing Marginal Returns
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2. Using cheddar cheese, explain in two sentences or fewer the following:
a. Income Effect
b. Substitution Effect
c. Law of Diminishing Marginal Returns
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- What’s law of diminishing returnsQ2. Law of diminishing marginal returns is applicable in both short run as well as long run. is it true or false? whats is the explanation demonstrate a graph(Scenario: Accounting and Economic Profit) Use Scenario: Accounting and Economic Profit. What is the opportunity cost of Wang's $100,000 inheritance being used to start his business?Scenario: Accounting and Economic ProfitRather than put the $100,000 that his grandmother left him in a mutual fund that earns 5% each year, Tommy Wang quit his job, which paid $60,000 per year, and started Wang's Wicker Furniture Store. He rented a showroom for $20,000 for the year, purchased $60,000 in wicker furniture, and incurred costs of $40,000 for sales help and advertising. In his first year, his revenue was $150,000.
- 2. The Marginal Cost curve will a. cut ATC at the minimum of ATC but cut AVC at a point to the left of the minimum of AVC. d. cut AVC at the minimum of AVC but cut ATC at a point to the right of the minimum of ATC. b. cut ATC at the minimum of ATC but cut AVC at a point to the right of the minimum of AVC. e. cut both ATC and AVC at their respective minimums c. cut AVC at the minimum of AVC but cut ATC at a point to the left of the minimum of ATC. explain your answer above thoroughly--graphical, algebraically, numerically.2. The Marginal Cost curve will a. cut ATC at the minimum of ATC but cut AVC at a point to the left of the minimum of AVC. d. cut AVC at the minimum of AVC but cut ATC at a point to the right of the minimum of ATC. b. cut ATC at the minimum of ATC but cut AVC at a point to the right of the minimum of AVC. e. cut both ATC and AVC at their respective minimums c. cut AVC at the minimum of AVC but cut ATC at a point to the left of the minimum of ATC. Choose and explain your answer above thoroughly--graphical, algebraically, numerically. Please use a graph in your answer, and explain in as much detail as possible.3. With the aid of a graph, explain why marginal costs will necessarily intersect average total cost whenever average total cost reaches a minimum for “well-behaved” cost curves. (Can you show this mathematically? HINT: Think of properties that must be satisfied at a minimum.) I will thumbs up solution if it is original answer and not from ChatGPT, if ChatGPT is used I will thumbs-down and report to Chegg. thank you! :)
- Q: Theoretically and graphically explain how firm choose optimum combination of inputs in short run and in the long run.6. Why does Marginal Cost rise?1. A firm is said to be earning normal profit whenever:A. Accounting profit is zero.B. Economic profit is positive.C. Accounting profit is positive.D. Total revenue equals explicit and implicit costs.2. If a 10% increase in inputs results in a 20% increase in output, then the firm is said to exhibit:A. Diseconomies of scaleB. Diminishing marginal returns to scaleC. Constant returns to scaleD. Economies of scale3. Economists have traditionally attempted to avoid the trap of:A. Thinking in terms of total utility.B. Computing marginal utilityC. Making interpersonal utility comparisons.D. None of the above.4. According to the water-diamond paradoxA. Water has a lower MU than Diamond.B. Water has a higher TU than Diamond.C. Prices reflect MU and not TUD. All of the above.
- Fill in the blank and explain the choice of correct answer. When the marginal product--------------------, the marginal cost--------- A) increases; increases. B) increases; remain the same. C) increases; dearases. D) remains the same; increases.a. What is optimization? How does it blow up the myth about profit being a result of a mere increasedecrease interplay between cost and revenue? b. How much should a firm sell of a particular product in order to maximize profit? What factor does it have to consider in arriving at this decision? c. “More Sales, More Profits”. Do you agree? Explain your answer5. Costs in the short run versus in the long run Ike’s Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company’s short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Number of Factories Average Total Cost (Dollars per bike) Q = 25 Q = 50 Q = 75 Q = 100 Q = 125 Q = 150 1 440 320 240 320 480 720 2 580 400 240 240 400 580 3 720 480 320 240 320 440 Suppose Ike’s Bikes is currently producing 125 bikes per month in its only factory. Its short-run average total cost is................................$ per bike. Suppose Ike’s Bikes is expecting to produce 125 bikes per month for several years. In this case, in the long run, it would choose to…
