Student Name (Nancy) Bailey Kelly
Saint Joseph’s University
Microeconomics – Fall 2010
2nd Quiz – October 11, 2010 *
I. Complete the following – taken from chapter 8 in our text, page 174, key question
number 7.
1. A firm has fixed costs of $60 and variable cost as indicated in the table at the bottom of
page 173 in Chapter 8 of our text. Complete the table and check your calculations by
referring to question 4 at the end of Chapter 9 in our text.
a. Graph total fixed costs, total variable and total costs. Explain how the law of
diminishing returns influences the shapes of the total variable-cost and total cost
curves.
b. Graph AFC, AWC, ATC, and MC. Explain the derivation and shape of each of
these four curves and their relationships to one another. Specifically, explain in
non-technical terms why the MC curve interests both the AVC and ATC curves
at their minimum points.
c. Explain how the location of each curve graphed in question 7b would be altered
if (1) total fixed cost had been $100 rather than $60 and (2) total variable cost
had been $10 less at each level of output.
II. Match the following terms and definitions – taken from “origin of the idea” in our text.
2. Law of Diminishing Returns 3 Piero Sraffa (1898-1983)
3. Production Relationships 6 Francis Edgeworth (1845-1926)
4. Minimum Efficiency Scale 2 David Ricardo (1772-1823)
5. Allocative Efficiency 4 Vilfredo Pareto
6. Diamond-Water Paradox 5 Adam Smith
III. Current Events – Dash Board:
7. According to the New York Times Business section in the Sunday newspaper the
Data Bank reported:
a. the Dow Jones Industrials Average closing at over 11,000 which represented a +
5.55 percentage change when compared to this time the previous year.
b. The Prime Rate (the base rate on corporate loans posted by at least 75% of the
nations largest banks) was_______.
c. Foreign currency in dollars for the Renminbi was _____ and dollars in foreign
currency was _____.
8. On October 8, 2010, United States Secretary of Labor, Hilda L. Solis announced the
unemployment rate for the month of September 2010 was 9.6 percent and for the last nine
months straight private sector jobs added to the economy were increasing.
