Quote (ZmTo @ Jun 26 2020 10:36pm)

Hey guys, just got a few maths questions that I need some help with! Any help would be lovely and greatly appreciated





ABC pizza has fixed costs of $10000 and constant marginal costs of $5 per unit produced.

(i) What are ABC’s total and average cost functions?
10000 + 5x with x number of units
(10000 + 5x) / x for avg I guess

(ii) Should ABC produce a large or small level of output in order to reach its minimum average total cost? Explain.
produce a ton : divides the fixed cost of 10k over a larger amount of units makes the cost per
unit lower
but can they sell and not pay storage costs?

(iii) If ABC pizza has to pay a tax that is proportional to the number of pizzas it produces, how does this tax affect ABC’s fixed, marginal, and average costs?
fixed is unaffexted

supposing a linear proportionality
marginal and average costs increase equally




Donnie’s medical masks is a mask making firm in a perfectly competitive market with marginal cost of producing masks q given by MC(q) = 1 + 0.01q. The market price of masks is $10.

(i) How many masks Donnie’s medical masks produce?

(ii) What is the producer surplus of Donnie’s medical masks?

(iii) If the average variable cost of Donnie’s medical masks is given by AVC(q) = 1 + 0.005q with fixed costs given by $2000. Will the firm be earning a positive, negative, or zero profit in the short run?



(i) Which is more price elastic? The demand for a specific brand of shampoo and the demand for shampoo in general.
specific more elastic because ppl crazy

(ii) Which is more price inelastic? The demand for cars in the short run and the demand for cars in the long run.
long term I guess

(iii) Explain the meaning of the idea that someone is risk averse. Use an example or diagram to help explain.
risk aversion is a cognitive bias in humans
we tend to give more importance to losses/potential losses than we do to gains.
Risk aversion varies from person to person.
Some people are more fearful at certain levels of
potential losses. Function of fear isnt linear with potential of loss


(iv) Explain what it means for someone to be risk neutral. Use an example or diagram to help explain

pure psychopath
.