<p>Ok, here's more Barron's problems which I am confused on. Not sure if it's me or the book ..</p>
<p>1) Opportunity costs or implicit costs of a "Mom & Pop" -owned buisness are:
(B) Equal to accounting profits (this is the answer)
(C) Equal to earnings or profits that could have occured using resources elsewhere (this is what I put.)
I always thought implicit costs weren't included in accounting profits ..</p>
<p>2) With capital FIXED at one uint with 1,2,3 unts of labor added in equal successive units, production of the output increases from 300 (1 unit of labor), to 350 (2 units of labor) to 375 (3 units of labor). Which of the following is a correct interpretation?
(B) This is long run decreasing returns to scale
(C) This is long run constant returns to scale (this is the answer)
(D) This is short run diminishing marginal productivity (this is what I put)
First of all I thought fixed means short run, b/c in the long-run capital can be disposed of. Secondly, isn't it diminishing marginal productivity? How is it constant?</p>
<p>4) Which of the following is NOT CORRECT about economis of scale?
(B) Economies of scale are associated with the rising or increasing portion of an average total cost (ATC) Curve (this is what I put)
(D) Economies of scale result in decreases in per unit average cost (this is the answer)
Isn't D what economies of scale is ... and the question says not correct ..</p>
<p>5) Marginal Cost (MC) is equal to average variable cost (AVC) and average total cost (ATC) when:
(B) AVC and ATC intersect MC at its maximum point (this is the answer)
(C) MC intersects AVC and ATC at their minimum points. (this is what I put)
I thought MC intersects AVC and ATC at their minimum ...</p>
<p>So confused, can someone help me out, as I feel Barrons is incorrect in most, if not all of these problems.</p>
<p>Ok:
1. you're right.
2. I think you're right too: MP1=300, MP2=50, MP3=25...it's obviously diminishing. And yes, all inputs are variable in the long run.
I don't know what 4 is...need to see all the choices.
5. MC intersects ATC at its minimum point.</p>
<p>Can you give which page numbers these are on in Barron's? Also, which edition do you have? I have the latest and I don't remember this many problems, though I've had a few. </p>
<p>People have said Barron's stinks for this, but for my purposes I think it was okay. I wasn't looking to learn Econ on my own; I just took CC courses in Macro and Micro this year with pretty good books (McConnell and Brue, I know a lot of AP classes use their materials). I just needed kind of a fill-in as to, did I miss anything that will be on the test, and a review. Barron's seems okay for this, but I wouldn't use it if I didn't already know something about econ. Just my two cents.</p>
<p>Yea, i've already taken a course in econ. But i've completly forgotten micro since it was like 6 months ago.
Anyways the problems are on pg. 95 (I have the 2007-2008 edition).</p>
<p>Some more questions ... can't tell if it's me or if its the book.
Pg. 114 in the Barrons book</p>
<p>(1) The individual firm, operating under perfect competition is characterized as:
(a) a price-maker (this is the answer)
(d) a price-taker (this is what i put)</p>
<p>(5) Which of the following is NOT CORRECT for the perfectly competitive firm, in the long run?
(a) price = minimum average cost
(b) price = marginal revenue
(c) price = minimum average variable cost (this is the answer)
(d) price = marginal cost
(e) normal profits (this is what I put)</p>
<p>For this one Barrons could be right, b/c i dont remember demand intersecting avc at it's min, but i always though that in the long-run profits were zero? Is normal profits the same thing as zero economic profits?</p>
<p>Cardinal Fang: oh yeah you're right, it shouldn't be aggregate. Thanks
asc3nd: For (5), the answer should be c, since P = AVC is shutdown point. And yup normal profit is zero economic profit.
I would say price-taker for (1) too...anyone?</p>
<p>In the long run, the perfectly competitive firm has zero economic profit, aka normal profit. Thus, price equals minimum average total cost but not variable cost. For the other questions, you seem to be right.</p>
<p>Anybody taking both tests tomorrow? Is studying PR enough for a 5?</p>
<p>I'm taking both.
I have no idea what's a 5. I just took an audit test for Micro and ended up with 69 points/86 = 80%. That is 47/60 for MC and 22/26 for FRQ.</p>