The information here shows that the quantity of pies produced per hour

| November 24, 2016

Scenario:

The information here shows that the quantity of pies produced per hour at Pearl’s Pie Factory depends on the number of workers.

# of Workers

Pies per Hour

Marginal Product of Labor

Cost of Factory

Cost of Workers

Total Cost of Inputs

0

0

Not Applicable

$30

0

$30

1

50

50

$30

$10

$40

2

90

40

$30

$20

$50

Reference the scenario above to answer these questions:

1. What are the fixed costs for Pearl’s Pie Factory?

2. What are the variable costs for Pearl’s Pie Factory?

3. Pearl has determined that her average total cost for a pie is 80 cents a pie. What does this mean? How does this differ from each pie’s marginal costs?

4. Name the opportunity costs for Pearl’s Pie Factory.

5. What are the implicit costs? Explicit costs?

6. How are the costs shown on the table affecting Pearl’s economic profit? Is there an area she might look to in order to decrease implicit costs? Explicit costs?

Scenario:

Your local airport recently started providing wireless Internet access throughout the airport for free. However, very few people have been using the free Internet, primarily because the airport serves a medium- to small-sized community.

Reference the scenario above to answer these questions:

1. Initially, what type of good is the wireless Internet provided by the airport? Explain your answer in terms of rivalry and excludability.

2. Suppose that several months later, more people have learned that the Internet service is available at the airport and usage has tripled. The connection speed has greatly slowed based on the recent high usage. Now what type of good is the wireless Internet service? Explain your answer in terms of rivalry and excludability.

3. What problems or economic issues can you determine from this type of good?

4. Select one of the problems you identified and offer a solution for how you might correct this issue.

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