Question

In: Economics

1)) Which of the following most likely represents a short-run business decision? A)Jane is trying to...

1)) Which of the following most likely represents a short-run business decision?

A)Jane is trying to decide whether to start a second franchise of her business.

B)Aaron hires two additional workers to help cover the holiday rush at his shop.

C)Xiang lists his delivery truck for sale in hopes of raising money to buy a new one.

D)Ellen applies for a loan to finance an expansion of her plumbing business.

2))Currently, the marginal product of labor is 32 units per week. The average product of labor at the current level of output is 48 units per week. If the employer hires one more worker, the marginal product of labor will be 30 units per week. The average product of labor will ______________.

A)Equal the marginal product of labor

B)Fall

C)Rise

D)Stay the same

1))At 2,000 units of output, the variable cost of production is $12,500 per week. Total cost of producing 2,000 units per week is $45,500. The fixed cost of producing 2,000 units of output per week is equal to ______.

A)$29,000

B)$33,000

C)$29.00

D)$22.75

Expert Solution

Q1. Answer is B. Aaron hires two additional workers to hep cover the holiday rush at his shop.
The explanation is as follows:

The decision to hire additional workers to help in holidays is a short run decision as it will have a impact till the time holiday gets over.

Q2. Answer is B. fall.

The explanation is as follows:

The average product of labor is 48 units per week.

Marginal product for hiring one more worker is 30 units per week.

The average product will remaing constant if the marginal product is equal to previous average product.

The average product will rise, if the marginal product is more than the previous average prooduct.

Hwere, the marginal product is lower than the previous averageg product. thereefore, the average product will happen to fall.

Q1. Answer is B. 33,000

The explanation is as follows:

Total cost = Total fixed cost + Total variable cost

Total cost of 2,000 units:; $ 45,500

Total Variable cost for 2,000 units: $ 12,500

Therfore, Total fixed cost of 2,000 units of output = Total cost - Total variable cost = $ 45,500 - $12,500 = $33,000

Rahul Sunny answered 2 years ago

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