Reference no: EM132180688 , Length: 1270 Words

Questions -

Question 1. Amos McCoy is currently raising corn on his 100-acre farm and earning an accounting profit of $100 per acre. However, if he raised soya beans, he could earn $200per acre. Is he currently an earning economic profit? Why or why not?

Question 2. Determine whether each of the following is an explicit cost or an implicit cost:

Question 3. What are economies of scale? Please give an example. What are diseconomies of scale? Please give an example.

Question 4. Your rich relative died and left you $100,000, which you decided to use for your own internet business. What will be your fixed and variable costs? Briefly discuss.

Question 5. Explain the shape of the long-run average cost curve. How firms use the long run cost curve to make choices about production.

Question 6. What is the relationship between marginal cost and average cost. Briefly explain.

Question 7. What distinguishes a firm's short run period from its long run period? Briefly explain.

Question 8. As a farmer you must decide how many times during the year to plant a new crop. Also you must decide how far apart to space the plants. Will diminishing returns to be a factor in your decision making? Briefly discuss.

Question 9. How does having menu that is uniform around the country provide McDonalds with economies of scale? Briefly discuss.

Question 10. What is the expected long run impact of information technology on productivity and cost?

Question 11. (Demand under perfect completion) What type of demand curve does a perfectly competitive firm face? Why?

Question 12. Explain the different options a firm has to minimize loses in the short run.

Question 13. (The short run-firms supply curve)Each of the following situations could exist for a firm in the short run. In each case, indicate whether the firm should produce in the short run or shut down in the short run, or whether additional information is needed to determine what it should do in the short run

Question 14. (The long run industry supply curve) A normal good I being produced in a constant-cost, perfectly competitive industry. Initially each firm is in long run equilibrium. Briefly explain the short run-adjustments for the market and the firm to decrease consumer incomes. What happens to output levels, prices profits and the number of firms?

Question 15. (Long run industry supply) why does the long run industry supply curve for an increasing cost - industry slope upward? What causes the increasing cost in an increasing-cost industry?

Question 16. Is provision of internet access a competitive industry? Briefly discuss.

Question 17. (The short run-firm supply curve)An individual competitive firm's short run supply curve is the portion of its marginal cost curve that equals or rises above the variable cost. Explain why.

Question 18. What are the major characteristics of perfect competitive market?

Question 19. (Perfect Competition and Efficiency) Define productive efficiency and allocative efficiency. What conditions must be met to achieve them?