Economics Study Questions Assignment

Description

1.Suppose Jill Johnson operates her pizza restaurant in a building she owns in the center of the city. Similar buildings in the neighborhood rent for $4000 per month. Jill is considering selling her building and renting space in the suburbs for $3000 per month, but she decides not to make the move. She reasons: “I would like to have a restaurant in the suburbs, but I pay no rent for my restaurant now, and I don’t want to see my costs rise by $3000 per month.” Evaluate Jill’s reasoning.

2. What is the difference between a firm’s shutdown point in the short run and in the long run? Why are firms willing to accept losses in the short run but not in the long run?

3.

Number of Workers

Mushrooms per Day (pounds)

1

12

2

30

3

45

4

50

5

54

6

56

The table above shows the technology of production at the Matsuko’s Mushroom Farm for the month of May.

1. a. What is the marginal product of the 4th worker?
2. What is the average product of labor when the farm hires 5 workers?
3.Diminishing marginal returns sets in when the ________ worker is hired.

a. What is the marginal product of the 4th worker?
What is the average product of labor when the farm hires 5 workers?
Diminishing marginal returns sets in when the ________ worker is hired.