Economics 1b questions and answers

Prof. Andrea Walters November 5, 2020 NAME:________________________________________ ECON 1B – Assignment 8 Homework assignments are due online, posted to canvas by the deadline. Please let me know if you have any questions, do your best to answer well, and check the answer keys when posted. This assignment is due Monday, November 9th 1. Imagine you and your friends decide to start a food truck. You will need to buy a truck, ingredients for the food you will sell, utensils and napkins, insurance for your truck, a business license, and hire workers. You are also going to spend 20 hours a week running the business out of a home office you set up. a. Of the costs listed above, which are explicit, and which are implicit? b. Of the costs listed above, which are fixed, and which are variable? 2. Imagine a commercial fisher notices the below relationship between the hours spent fishing and the number of fish caught. a. What is the marginal product of each additional hour of fishing? Hours Q of Marginal Fish Product 0 0 1 10 2 19 3 25 4 27 5 28 b. What do you call the effect displayed when the number of hours increases, but the quantity of fish decreases over time? 3. What is meant by the phrase “Diseconomies of Scale”? Give an example. 4. Why will economic profit always be lower than accounting profit? Prof. Andrea Walters November 5, 2020 NAME:________________________________________ 5. Nimbus, Inc. makes brooms and sells them door to door. The relationship between Nimbus workers and output on a given day is shown in the table below a. Determine the marginal product of each worker. b. If each worker costs $100 per day, and the firm faces fixed costs of $200 a day, what are the Variable Costs, Total Costs, and Average Total Cost? Workers Output Marginal Variable Cost Total Cost Average Product Total Cost 0 0 1 20 2 50 3 90 4 120 5 140 6 150 7 155 6. Using the schedule of costs below, graph the Marginal Cost Curve, Average Total Cost Curve, and Average Variable Cost Curves. Q ATC AVC MC 1 $18 $8 $8 2 $10 $5 $2 3 $8 $4.67 $4 4 $9 $6 $8 5 $10 $8 $18 ...