Question 1. Give a brief summary of economic costs (i.e. how are they different from accounting costs). In the short-run, why might a firm still operate even when there is a loss.
Question 2. Read the following short article:
Vargas, L. (2001). ââ?¬Å"Maquiladoras: Impact on Texas Border Cities,ââ?¬Â? in The Border Economy, Federal Reserve Bank of Dallas. Retrieved on February 18, 2011 from: https://www.dallasfed.org/research/border/tbe_vargas.html
How does this article apply the marginal decision rule to the problem of choosing the mix of factors or production (capital intensive vs. labor intensive methods of production)? How do maquiladoras benefit the U.S. economy?
Question 3. The type of firm also plays a crucial role in how the firm makes a profit. Describe the characteristics of a perfectly competitive firm in your own words. What will happen to the profits of a perfectly competitive firm in the long run?
Question 4. Compare the profit for the perfectly competitive firm to a monopoly in the long run. Why is it different?