discussion questions 5258603 2



Write a 75-100 word response to each of the bulleted questions below. Each question must have its own response and meet the minimum word count.


  1. Classify each of the following as fixed or variable costs:

    1. Outsourced payroll services.

    2. Leased offices.

    3. Company-owned building.

    4. Payroll taxes.

  2. Explain how each of the following will affect the average fixed cost, average variable cost, average total cost, and marginal cost curves faced by a steel manufacturer: 

    1. New union agreement increases hourly pay.

    2. Local government imposes an annual lump-sum tax per plant.

    3. Federal government imposes a “stack tax” on emission of air pollutants by steel mills.

    4. New steel-making technology increases productivity of every worker.

  3. A dressmaker can sew 800 garments with 160 bolts of fabric and 3,000 hours of labor. Another dressmaker can sew 800 garments with 200 bolts of fabric and 2,000 hours of identical labor. Fabric costs $100 a bolt and labor costs $10 an hour.

    1. Is it possible for both methods to be technically efficient? Why or why not?

    2. Is it possible for both methods to be economically efficient? Why or why not?

  4. A farmer is producing where MC = MR. Say that half of the cost of producing wheat is the rental cost of land (a fixed cost) and half is the cost of labor and machines (a variable cost). If the average total cost of producing wheat is $8 and the price of wheat is $6, what would you advise the farmer to do? (“Grow something else” is not allowed.) 

  5. What is the difference between complementary and substitutes products? Why is this an important distinction?

  6. Distinguish the various cost curves and describe the relationships among them.

  7. Explain the role of the firm in economic analysis.

  8. Describe the production process in the short run.

  9. Distinguish technical efficiency from economic efficiency.

  10. Explain the adjustment process from short-run equilibrium to long-run equilibrium.



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