1. Which of the following cost curves are continually upward sloping?

Group of answer choices

None of the choices correctly answers this question.

average total cost and long run average total cost

average total cost and average variable cost

marginal cost and average variable cost

total fixed cost and total variable cost

2. When a firm uses standardized inputs, it is most likely the firm will use _______ to obtain the inputs. When a firm uses specialized inputs and there are substantial bureaucratic costs, it is more likely to rely on _______ to obtain the inputs.

Group of answer choices

a contract, vertical integration

a spot exchange, vertical integration

a spot exchange, a contract

a contract, a spot exchange

vertical integration, a spot exchange

ABC company is considering producing a new range of smartphones that will require it to build a new factory. Feasibility studies have been done on the factory which cost $5 million. The studies have found the following:

1. The factory will cost $25 million and will have a useful life of 20 years.

2. The land where the factory will go is currently used as a carpark for workers and it is assumed that the company will have to pay $200000 per year for their workers to park in a nearby carpark.

3. The factory will be depreciated on a straight line basis and will have a salvage value of $0 but it is believed that most of it can be sold for scrap after 20 years for $50000.

4. Due to the nature of the business they are in, they will have to perform some environmental tests to make sure that some of the chemicals they are using are not entering the ground water around the factory. These tests will be performed every 5 years and cost $625000.

5. Through the building of this factory and the selling of the phones it produces, it’s revenue will increase by $5 million in year 1 and remain at this level for the operational life of the factory.

6. The extra costs that the company accrues per year due to the project are $435000 for labour, $50000 for overhead like power and water bills and marketing costs for the new line of phones will be $500000 per year but will decrease by $15000 per year as the phone gains greater penetration.

7. The company’s current cost of capital is 8% per year.

8. The tax rate is 30%.

9. The project requires an initial investment in working capital of $1000000 that is returned in year 20.

Calculate the break even point for the following variables:

a. The cost of capital.

b. The yearly revenue.

c. The labour cost.

1. Figure the costs in the green shaded cells

   At what quantity does diminishing marginal returns take affect?

2. Short-run Costs
   Quantity	Total Fixed Cost	Average Fixed Cost	Total Variable Cost	Average Variable Cost	Total Cost	Average Total Cost	Marginal Cost
   0	$ 140.00	-	-	-		-	-
   5			$ 100.00
   10			180.00
   15			245.00
   20			300.00
   25			350.00
   30			405.00
   35			467.50
   40			540.00
   45			627.50
   50			732.50
   55			862.50
   60			1,027.50

II.We discussed the following table in the lecture/presentation. Just for your own practice, try filling out the columns for each:

Quantity Fixed Cost Variable Cost Total Cost Average Fixed Cost   Average Variable Cost   Average Total Cost Marginal Cost
1 100 10

2 100 15

3 100   25

4 100   40

5 100 60

6 100 85

7 100 115

8 100 150

9 100 190

10 100 235

Following are the questions you should be able to answer:

1.What happens to Average Fixed Cost as quantity increases?
2.What happens to Average Variable Cost as quantity increases?
3.What happens to Average Total Cost as quantity increases?
4.What is the distance between Average Variable Cost and Average Total Cost?
5.What is the shape of Average Total Cost? Why is it shaped that way? (In other words, what is going on until Q=7? What happens after Q=7?)
6.What is the relationship between Marginal Cost and Average Total Cost?
7.What is the relationship between Marginal Cost and Average Variable Cost?
8.What happens to Average Total Cost in the Long Run? What is the shape? Why?

1. Demand: P=120-Q    Total Cost: TC=Q²

Marginal Revenue:  MR=120-2Q           Marginal Cost: MC=2Q

What is the amount of profit for this monopolist?

2. Demand: P=120-Q                                 Total Cost: TC=Q²

Marginal Revenue:  MR=120-2Q           Marginal Cost: MC=2Q

For this monopolist, the profit-maximizing price is ________ and the profit-maximizing quantity is _________.

3. Demand: P=120-Q                                 Total Cost: TC=Q²

Marginal Revenue:  MR=120-2Q           Marginal Cost: MC=2Q

Compared to perfect competition where P=MC, what is the amount of deadweight loss caused by this monopolist _________.

20. A common kitchen trick to ripening fruit is to place unripe fruit near a piece of ripe fruit on the counter. This greatly increases the rate of ripening for the unripe fruit. How does this observation provide evidence that ethylene is a gas?

• Do you think the net effect of the new on-campus stadium at CSU for the economy of city of Fort Collins has been positive, negative, or near zero?
• Should the NFL and MLS share stadiums? Why or why not?

Hedonic Price Method:

a. Explain how the HPM can be used to measure the effects on housing values for homes that are located near

noisy airports.

b. What are some problems with the HPM approach (explain 2 problems)?

Guinea worm is one of the human diseases that is on the verge of eradication. There is no preventive vaccine or treatment available for the disease. Discuss the public health prevention and control efforts that have enabled the near eradication of Guinea worm disease globally.