Principles of Macroeconomics Plus MyLab Economics with Pearson eText (1-semester access) -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134424026
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 2, Problem 1.9P
To determine
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In the graph above, the resources in this economy are
A. specialized at producing corn.
B. specialized at producing robots.
C. not specialized toward either corn nor robots (they're generic).
Allocative efficiency is concerned with:
producing the combination of goods most desired by society.
achieving the full employment of all available resources.
producing every good with the least-cost combination of inputs.
reducing the concavity of the production possibilities curve.
In economics, the cost of production is defined as the expenditures incurred to obtain the factors of production such as labor, land, and capital that are needed in the production process of a product. Explain the following in relation the total cost in economics.
A firm pays its accountant an annual allowance of $10,000. Is this an economic cost?
The owner of a small retail store does her own accounting work. How
would you measure the opportunity cost of her work?
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Principles of Macroeconomics Plus MyLab Economics with Pearson eText (1-semester access) -- Access Card Package (12th Edition)
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- In economics, the cost of production is defined as the expenditures incurred to obtain the factors of production such as labor, land, and capital that are needed in the production process of a product. Explain the following in relation the total cost in economics i. A firm pays its accountant an annual allowance of $10,000. Is this an economic cost? Explain. ii. The owner of a small retail store does her own accounting work. How would you measure the opportunity cost of her work?arrow_forwardSuppose that low-productivity workers all have marginal products of 8 and high-productivity workers all have marginal products of 16. The community has equal numbers of each type of worker. A firm cannot directly tell the difference between the two types of workers. Without any further information, the firm is willing to offer a wage at the average productivity. The local community college offers a course in microeconomics, which does not increase productivity for either type of workers. High-productivity workers think taking this course is as bad as a wage cut of $3, and low-productivity workers think it is as bad as a wage cut of $9. With the certificate, the firm is willing to offer a high wage of $16. Without it, the firm is willing to offer a low wage of $8. But the firm cannot still tell the true productivity. In this case, is it worth for the low-productivity workers taking the course? (Yes, No, or Uncertain) Thus, this situation will lead to a (pooling, or separating)…arrow_forwardBarney sells fruits and vegetables at an outdoor market stand. He pays $20 in rent per day for the stand, and he pays 8% of the total sales (x) to an employee. Barney and his employee use the following methods to figure out the amount, in dollars, Barney has left after paying for the rent and his employee for one day. Barney takes the total sales after he pays his employee and subtracts 20. The employee takes the total sales, subtracts the amount of pay she will receive, and then subtracts 20. Which equation correctly shows why both their methods produce the same result?arrow_forward
- A fast-food company spends millions of dollars to develop and promote a new hamburger on its menu only to find that consumers won& buy it because they done like the taste. From an economic perspective, the company should.......... keep the hamburger on the menu because they have spent so much money and time developing and promoting the product. spend more money to develop a more efficient way to cook the hamburger so it cooks in a shorter time. pull the hamburger off the menu and treat the development and promotion expenditures as a sunk cost. keep trying to sell the hamburger so that people who developed and promote it have a job with the company.arrow_forwardWhich of the following is true in the markets for factors of production in the circular-flow diagram, a. households provide firms with labor, land, and capital. b. households provide firms with savings for investment. c. firms provide households with goods and services. d. firms provide households with revenue.arrow_forwardDetermine whether each of the following would increase or decrease the opportunity costs for mothers who decide not to work outside the home. Explain your answers. Higher levels of education for women Higher unemployment rates for women Higher average pay levels for women Lower demand for labor in industries that traditionally employ women Many households supplement their food budget by cultivating small vegetable gardens. Explain how each of the following might influence this kind of household production: Both husband and wife are professionals who earn high salaries. The household is located in a city rather than in a rural area. The household is located in a region where there is a high sales tax on food. The household is located in a region that has a high property tax rate.arrow_forward
- The production engineers at Impact Industries have derived the optimal combinations of labor and capital. These are the only two inputs used by Impact. The following chart shows the combinations of labor and capital for three levels of output. Q is the output level. L* is the optimal amount of labor. K* is the optimal amount of capital. The price of labor is $90 per unit. The price of capital is $15 per unit. Q L* K* 120 5 20 180 7 7 240 12 24 a) If the manager of Impact Industries decides to produce 120 units, what will the long-run total cost and long-run average cost of producing 120 units? Show all calculations. b) If the manager of Impact Industries decides to produce 180 units, what will the long-run total cost and long-run average cost of producing 180 units? Show all calculations. c) If the manager of Impact Industries decides to produce 240 units, what will the long-run total cost and long-run average cost of producing 240…arrow_forwardThe production engineers at Impact Industries have derived the optimal combinations of labor and capital. These are the only two inputs used by Impact. The following chart shows the combinations of labor and capital for three levels of output. Q is the output level. L* is the optimal amount of labor. K* is the optimal amount of capital. The price of labor is $90 per unit. The price of capital is $15 per unit. Q L* K* 120 5 20 180 7 7 240 12 24 a) If the manager of Impact Industries decides to produce 120 units, what will the long-run total cost and long-run average cost of producing 120 units? Show all calculations. b) If the manager of Impact Industries decides to produce 180 units, what will the long-run total cost and long-run average cost of producing 180 units? Show all calculations. c) If the manager of Impact Industries decides to produce 240 units, what will the long-run total cost and long-run average cost of producing 240…arrow_forwardThe production engineers at Impact Industries have derived the optimal combinations of labor and capital. These are the only two inputs used by Impact. The following chart shows the combinations of labor and capital for three levels of output. Q is the output level. L* is the optimal amount of labor. K* is the optimal amount of capital. The price of labor is $90 per unit. The price of capital is $15 per unit. Q L* K* 120 5 20 180 7 7 240 12 24 a) If the manager of Impact Industries decides to produce 120 units, what will the long-run total cost and long-run average cost of producing 120 units? Show all calculations. b) If the manager of Impact Industries decides to produce 180 units, what will the long-run total cost and long-run average cost of producing 180 units? Show all calculations.arrow_forward
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