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Chapter 11: Problem 2
If the marginal product of labor is rising, is the marginal cost of production rising or falling? Briefly explain.
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Sally looks at her college transcript and asks you, "How is this possible? My grade point average for this semester's courses is higher than my grade point average for last semester's courses, but my cumulative grade point average still went down from last semester to this semester." Explain to Sally how this outcome is possible.
What is the difference between the short run and the long run? Is the amount of time that separates the short run from the long run the same for every firm?
Is Jill Johnson correct when she states the following: "I am currently producing 20,000 pizzas per month at a total cost of \(\$ 75,000\). If I produce 20,001 pizzas, my total cost will rise to \(\$ 75,002\). Therefore, my marginal cost of producing pizzas must be increasing." Draw a graph to illustrate your answer.
What are implicit costs? How are they different from explicit costs?
In the ancient world, a book could be produced either on a scroll or as a codex, which was made of folded sheets glued together, something like a modern book. One scholar has estimated the following variable costs (in Greek drachmas) of the two methods: $$ \begin{array}{l|c|l} \hline \text { Scroll } & \text { Codex } \\ \hline \begin{array}{l} \text { Cost of writing } \\ \text { (wage of a scribe) } \end{array} & 11.33 \text { drachmas } & 11.33 \text { drachmas } \\ \hline \text { Cost of paper } & 16.50 \text { drachmas } & 9.25 \text { drachmas } \\ \hline \end{array} $$ Another scholar points out that a significant fixed cost was involved in producing a codex: In order to copy a codex \(\ldots\) the amount of text and the layout of each page had to be carefully calculated in advance to determine the exact number of sheets \(\ldots\) needed. No doubt, this is more time-consuming and calls for more experimentation than the production of a scroll would. But for the next copy, these calculations would be used again. a. Suppose that the fixed cost of preparing a codex was 58 drachmas and that there was no similar fixed cost for a scroll. Would an ancient book publisher who intended to sell 5 copies of a book be likely to publish it as a scroll or as a codex? What if the publisher intended to sell 10 copies? Briefly explain. b. Although most books were published as scrolls in the first century C.E., by the third century, most were published as codices. Considering only the factors mentioned in this problem, explain why this change may have taken place.
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