《西方经济学》习题答案—答案13.docVIP

SOLUTIONS TO TEXT PROBLEMS: Quick Quizzes 1. Farmer McDonald’s opportunity cost is $300, consisting of 10 hours of lessons at $20 an hour that he could have been earning plus $100 in seeds. His accountant would not count the lost banjo-lesson money, only the seeds, worth $100. If McDonald earns $200 from selling the crops, then McDonald earns a $100 accounting profit ($200 sales minus $100 cost of seeds) but makes an economic loss of $100 ($200 sales minus $300 opportunity cost). 2. Farmer Jones’s production function is shown in Figure 1 and his total-cost curve is shown in Figure 2. The production function is concave because of diminishing marginal product. As the number of bags of seeds increases, the marginal product declines, and the production function becomes flatter. The total-cost curve is convex, as the curve gets steeper as the amount of production increases. That is also a feature that arises because of diminishing marginal product, since each additional bag of seeds has lower marginal product and thus the cost of producing additional bushels of wheat goes up. Figure 1 Figure 2 3. The average total cost of producing 5 cars is $250,000/5 = $50,000. Since total cost rose from $225,000 to $250,000 when output increased from 4 to 5, the marginal cost of the fifth car is $25,000. The marginal-cost curve and the average-total-cost curve for a typical firm are shown in Figure 3. They cross at the efficient scale because at low levels of output, marginal cost is below average total cost, so average total cost is falling. But after the two curves cross, marginal cost rises above average total cost, and average total cost starts to rise. So the point of intersection must be the minimum of average total cost. Figure 3 4. The long-run average total cost of producing 9 planes is $9 million/9 = $1 million. The long-run average total cost of producing 10 planes is $9.5 million/10 = $0.95 million. Since the long-run average total cost