Unit 3 Problem Set Rubric

Instructions1. Put away you pen and pencils2. Put your name where it says “Graded

by:”3. We will grade questions 1 and 44. After grading each question, write in

their score in the blank. ex: ( ____/5)5. Follow the directions explicitly!

Questions #1:Real World Examples

20 Points Total

5 Point Total 2 Points- Definition (As additional inputs

(workers) are added to fixed resources, the additional output generated by each new input will eventually fall.

2 Points- Example showing that MARGINAL PRODUCT (additional output from each new worker) will eventually fall

1 Point (Clarity)- Numbers in example (numbers show how marginal product eventually falls)

A. Law of Diminishing Marginal Returns

5 Point Total 1 Point- definition of fixed costs (costs that DO NOT change with the amount

produced)1 Point- Example of a fixed costs/resource1 Point- definition of variable costs (costs that change with the amount

produced)1 Point- Example of a variable cost/resource1 Point- definition of total cost (fixed plus variable cost)

B. Fixed, Variable, and Total Costs

5 Point Total 1 Point- definition of accounting profit(revenue minus accounting cost or

traditional out of pocket costs)1 Point- Example excluding opportunity cost1 Point- definition of economic profit (revenue minus accounting and opportunity

cost)1 Point- Example including opportunity cost1 Point- Clarity of examples

C. Accounting vs. Economic Profit

5 Point Total 1 Point- definition of economies of scale(Long run costs fall as mass production

techniques are used)1 Point- Example 1 Point- definition diseconomies of scale(Long run costs increase as the business

becomes difficult to manage) 1 Point- Example1 Point- Clarity of examples

D. Economies and diseconomies

3. Cory’s Surfboard Inc.20 Points Total

3.The Chart

1 Point 1 Point 1 Point 1 Point 1 Point

5 Point Total

5 Point Total 1 point- Correctly labeled axis with numbers 1 point- Correctly plotted MC1 point- Correctly plotted ATC1 point- Correctly plotted AVC1 point- Correctly plotted AFV

3. A: Plotted Graph

Quantity

Co

st/P

rice

AFC

AVC

ATCMC

5 Point Total 1 Point- Cory’s MC, ATC, and AVC

curves would increase.1 Point- Fixed costs will not change 1 Point- Each correct shift

Question #3B

Quantity

Co

sts

(do

llar

s)

AFC

AVCATC

MCATC1

AVC1

MC1

5 Point Total 1 point- Output = 7 surfboards1 point- Explanation- Cory should produce where

MR=MC to maximize profits2 point- $65.71 Profit per Unit1 point- Explanation- Cory is selling each unit for

$150 and his cost for each surfboard is $84.29.

OR

Total Profit equals TR ($1050)- TC ($590)= $460$460 divided by 7 equals $65.71

Question 3.C.

4. Practice FRQs

5. Perfect Competition10 Points Total

P

Q

P

Q5000

D

S

Industry Firm

$10 $10

15

MR=D

MC

8

5 Points- Long Run to Short-Run5 Points- Short-run back to Long-run

ATC

Copyright ACDC Leadership 2015

P

Q

P

Q5000

D

S

Industry Firm

$10 $10

16

MR=D

MC

8

D1

$5

Demand Increases The price increases and quantity increases

Profit is made in the short-run

ATC

MR1=D1

7

$5

Copyright ACDC Leadership 2015

P

Q

P

Q5000

D

S

Industry Firm

$10 $10

17

MR=D

MC

8

D1

$5

Demand Increases The price increases and quantity increases

Profit is made in the short-run

ATC

MR1=D1

7

$15

S1

3000Copyright ACDC Leadership 2015

P

Q

P

QIndustry Firm

$10 $10

18

MR=D

MC

8

D1

Demand Increases The price increases and quantity increases

Profit is made in the short-run

ATC

S1

3000Copyright ACDC Leadership 2015