Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 7, Problem 3.2P
To determine
Alternative combination of capital and labor.
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At Dana's dairy farm, the average total cost of producing 19 liters of milk is $10, while the average total cost of producing 20 liters
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Principles of Economics (12th Edition)
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- Aaron has been spending five nights studying for his math tests and his current grade in the course is 90 percent. He decides to take a part-time job and study only four nights for his next test. As a result, after his next test, his grade falls to 70 percent. What is Aaron's marginal cost of working one night a week? Aaron's marginal cost of working one night a week is OA. 20 percentage points OB. greater than 70 percentage points and less than 90 percentage points OC. 70 percentage points OD. 90 percentage pointsarrow_forwardWhat is theoretical relationship between Marginal Cost and Average costarrow_forwardAn Engineer earns $200 an hour in her profession. She can hire a Housekeeper for $15 an hour to take care of her home. The Engineer is very smart and hard working. She has found out that she can do the Housekeeping work twice as fast as her Housekeeper. Should she fire the Housekeeper and do the work herself? What principle in Economics should be used in answering this question?arrow_forward
- Explain the implicit costs associated with pursuing an MBA. Which do you think are greater for a typical student – the implicit or explicit costs? What does this depend on? Some people consider implicit costs less important than explicit costs because no money is actually exchanged when an organization or individual incurs an implicit cost. Do you think this is accurate? Explain why or why not.arrow_forwardA small company that shovels sidewalks and driveways has 100 homes signed up for its services this winter. It can use various combinations of capital and labor: intensive labor with hand shovels, less labor with snow blowers, and still less labor with a pickup truck that has a snowplow on front. To summarize, the method choices are: Method 1: 50 units of labor, 10 units of capital Method 2: 20 units of labor, 40 units of capital Method 3: 10 units of labor, 70 units of capital If hiring labor for the winter costs $100/unit and a unit of capital costs $400, what is the best production method? What method should the company use if the cost of labor rises to $200/unit?arrow_forwardA small company that shovels sidewalks and driveways has 100 homes signed up for its services this winter. It can use various combinations of capital and labor: intensive labor with hand shovels, less labor with snow blowers, and still less labor with a pickup truck that has a snowplow on front. To summarize, the method choices are: Method 1: 50 units of labor, 10 units of capital Method 2: 20 units of labor, 40 units of capital Method 3: 10 units of labor, 70 units of capital Question If hiring labor for the winter costs $100/unit and a unit of capital costs $400, what is the best production method? What method should the company use if the cost of labor rises to $200/unit?arrow_forward
- Typed and correct answer please. I ll ratearrow_forwardYour construction company has built 50 houses so far this year at a total cost to the company of $8 million. If the company builds a 51st house, its total cost will increase to $8.18 million. What is the marginal cost of the 51st house?arrow_forwardWhat is the difference between the labor intensive production and capital intensive production approach.arrow_forward
- Your aunt is thinking about opening a hardware store.She estimates that it would cost $500,000 per year to rent the location and buy the stock. In addition, she would have to quit her $50,000 per year job as an accountant. What is your aunt’s opportunity cost of running a hardware store for a year? If your aunt thinks she can sell $510,000 worth of merchandise in a year, should she open the store? Explain.arrow_forwardTori is comparing two job offers at engineering and construction firms. One is in Atlanta at a starting salary of $40,000, and the other in Minneapolis at a starting salary of $43,000. Tori looks up the cost-of-living index (COLI) for each city and finds the following information: Atlanta’s COLI is 95.6 (costs are 95.6% of the national average). Minneapolis’s COLI is 111 (costs are 111% of the national average). Are the two salary offers comparable?arrow_forwardResource specialization and division of labor cause the marginal product of labor to increase, but only for a time. Group of answer choices True Falsearrow_forward
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