chapter 11 microeconomics eighth edition by glenn hubbard and anthony patrick o'brien

Short Answer Questions chapter 11 microeconomics Technology, Production and Cost 1. You are studying for your economics exam with a friend, and your friend tells you that he thinks that if a firm can spread overhead costs over larger levels of output as output expands, then marginal costs must decline. Explain the flaw in your friend's reasoning. 2. What is the difference between a sunk cost and an opportunity cost? 3. Figure 10-6 on page 340 in the textbook illustrates a bookstore's long-run average total cost curve. The average total cost of selling 60,000 books per month ($20) is greater than the average total cost of selling 40,000 books per month ($18). If the bookstore sells 60,000 books at a cost of $20 each, is it producing inefficiently? 4. The last column of Table 10-3 on page 331 in the textbook shows that the marginal product of labor at Jill Johnson's restaurant changes as additional workers are hired. The marginal product of labor of the second worker (250 pizzas) is greater than the marginal product of labor for any other worker. To make the most profit, should Jill hire two workers? 5. In his famous account of the division of labor in a pin factory, Adam Smith refers to "..the important business of making a pin..." Even in Smith's day, the total value of pin production in the United Kingdom was not a large fraction of total output. Why would Smith use the word "important" in referring to the production of a seemingly insignificant product