PRODUCTION AND COST ASSIGNMENT 1. What are firms and what do they do? 2. What is the difference between a firm and an industry? Give examples. 3. What specifically is the main goal of a firm? 4. How are profits defined in economics and how do they relate to the goals of the firm? 5. What is the difference between accounting profits and economic profits? 6. What are normal profits? 7. How are the short and long run defined? What explains the difference between the two? 8. Define average and marginal products and what is their relationship? 9. What do typical marginal and average product curves look like? Show graphically 10. What do typical AVC, ATC,AFC, and MC curves look like? Show graphically. Quantity of Labor TP MP AP TFC TVC TC ATC AVC AFC MC 1 5 2 12 w 18 A 22 5 25 1. Complete the table above assuming that total fixed costs are $1,500 and wages are $100 per worker. 2. What specifically does the Law of Diminishing Returns suggest? 3. Define average and marginal products and what is their relationship? 4. What do typical marginal and average product curves look like? Show graphically 5. What do typical AVC, ATC,AFC, and MC curves look like? Show graphically