mean: 27.0, max: 46
DESCRIPTION
Mean: 27.0, Max: 46. This is just a suggested grade based on your midterm performance…. An answer key to Midterm I is available on our course website. If you feel you didn’t do well in the midterm, work with your classmates for homework and use my office hours to improve your understanding. - PowerPoint PPT PresentationTRANSCRIPT
Econ 301(sec 2) Midterm 1
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>=45 40-44 35-39 30-34 25-29 20-24 15-19 10-14 <10
A+ A: A-- B+ B B-- C D F
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Mean: 27.0, Max: 46This is just a suggested grade based on your midterm performance…
• An answer key to Midterm I is available on our course website.
• If you feel you didn’t do well in the midterm, work with your classmates for homework and use my office hours to improve your understanding.
Q 2
• At utility-maximizing consumption, marginal utility per dollar should be equalized over all goods!
• If , then spend one more dollar
on bread and one less dollar on juice; your utility will increase!
Gasoline
Gasoline
Juice
Juice
Bread
Bread
P
MU
P
MU
P
MU
Juice
Juice
Bread
Bread
P
MU
P
MU
Q 3Labor Total output Marginal product Average product
input (Total product) of labor of labor
0 0 - -
1 (a) (b) 50
2 (c) 30 (d)
3 90
4 24
5 4
6 96
Q4
(a)
- To draw demand curves, make sure you find the right intercepts and slopes!
- When adding up the demands in West and East P., you should do so horizontally
Q5 (a)
P
Q Food ($)
OtherConsumption
($)
U2A
U1
B
•With cash instead of food stamps, the family chooses basket C on U3, which is preferred to point B on U2, the utility-maximizing consumption given food stamps.
CU3
• Next Aplia HW: “The Cost of Production in the Short Run II” due on Sunday Oct 8•“The Cost of Production in the Long Run II” will be due next week
Q5 (b)
Do food stamps ensure that low income families increase their consumption of food? Explain. You may use graphs.
The answer is: Food stamps do NOT NECESSARILY ensure that low income families increase their consumption of food.
The point of this question is that consumtion of a good does not always increase when income increases (i.e. the income effect can be negative, or equivalently, a good may be an inferior good.) This possible exists regardless of whether income increase is due to cash subsity or food stamps.
Q5 (b)
P
Q Food ($)
OtherConsumption
($)
U2
A
U1
B
•If food is an inferior good over the relevant income range, then food consumption with food stamps (F2) can be less than that without (F1).
F2 F1
• Note that we are not saying food stamp is a bad idea (or a good idea)
• Why food stamp could be an issue: recent trends in obesity and nutrition
• Concerns about midterm? Let me know
• Today my office hour is shorter than scheduled: 1:30-2:30.
Ch 7 Cost of production (cont.)
• Recall the definition of various costs in the short run:– Total Cost (TC)– Fixed Cost (FC), Variable Cost (VC)– Marginal Cost (MC)– Average Fixed Cost (AFC), Average Variable
Cost (AVC). Average Total Cost (ATC)
Fixed Cost
100 100 100 100 100 100 100 100 100 100 100
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100
120
0 1 2 3 4 5 6 7 8 9 10
Unit of output
Co
sts Fixed Cost
Average Fixed Cost
0
20
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60
80
100
120
0 1 2 3 4 5 6 7 8 9 10
Unit of output
Co
sts
Average Fixed Cost100/1=100
100/2=50
100/4=25
FC and AFC
FC, VC and TC
025
45 5777
102136
170
226
298
390
100125
145 157177
202236
270
326
398
490
0
100
200
300
400
500
600
0 1 2 3 4 5 6 7 8 9 10
Unit of output
Co
sts
Fixed Cost
Variable Cost
Total Cost
Marginal Cost
2520
12
2025
34 34
56
72
92
0
10
20
30
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80
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100
0 1 2 3 4 5 6 7 8 9 10
Unit of output
Co
sts
Marginal Cost
(=125-100)
226-170 = 326-270 =
Marginal cost
FC, VC and TC
025
45 5777
102136
170
226
298
390
100125
145 157177
202236
270
326
398
490
0
100
200
300
400
500
600
0 1 2 3 4 5 6 7 8 9 10
Unit of output
Co
sts
Fixed Cost
Variable Cost
Total Cost
MC, AFC, AVC, and ATC
0
25 22.5 19 19.25 20.4 22.67 24.3 28.2533.1
39
125
72.5
52.344.25 40.4 39.3 38.6 40.75 44.2
49
0
20
40
60
80
100
120
140
0 1 2 3 4 5 6 7 8 9 10
Unit of output
Co
sts
Average Variable Cost
Average Total Cost
=125/1
=145/2
326/8
226/8
Average total cost (ATC)
and
Average variable cost (AVC)
FC, VC and TC
100125
145 157177
202236
270
326
398
490
0
100
200
300
400
500
600
0 1 2 3 4 5 6 7 8 9 10
Unit of output
Co
sts
Fixed Cost
Variable Cost
Total Cost
MC, AFC, AVC, and ATC
0
20
40
60
80
100
120
140
0 1 2 3 4 5 6 7 8 9 10
Unit of output
Co
sts
Marginal Cost
Average Fixed Cost
Average Variable Cost
Average Total Cost