1. Unit 3 Problem Set Rubric

2. Instructions Put away you pen and pencils
Put your name where it says “Graded by:”
We will grade questions 1 and 4
After grading each question, write in their score in the blank. ex: ( ____/5)
Follow the directions explicitly!

3. Questions #1: Real World Examples
20 Points Total

4. 5 Point Total A. Law of Diminishing Marginal Returns
2 Points- Definition (As additional inputs (workers) are added to fixed resources, the additional output generated by each new input will eventually fall.
2 Points- Example showing that MARGINAL PRODUCT (additional output from each new worker) will eventually fall
1 Point (Clarity)- Numbers in example (numbers show how marginal product eventually falls)

5. 5 Point Total B. Fixed, Variable, and Total Costs
1 Point- definition of fixed costs
(costs that DO NOT change with the amount produced)
1 Point- Example of a fixed costs/resource
1 Point- definition of variable costs
(costs that change with the amount produced)
1 Point- Example of a variable cost/resource
1 Point- definition of total cost
(fixed plus variable cost)

6. C. Accounting vs. Economic Profit 5 Point Total
1 Point- definition of accounting profit
(revenue minus accounting cost or traditional out of pocket costs)
1 Point- Example excluding opportunity cost
1 Point- definition of economic profit
(revenue minus accounting and opportunity cost)
1 Point- Example including opportunity cost
1 Point- Clarity of examples

7. D. Economies and diseconomies 5 Point Total
1 Point- definition of economies of scale
(Long run costs fall as mass production techniques are used)
1 Point- Example
1 Point- definition diseconomies of scale
(Long run costs increase as the business becomes difficult to manage)
1 Point- Clarity of examples

8. 3. Cory’s Surfboard Inc.
20 Points Total

9. 3.The Chart
5 Point Total
1 Point
1 Point
1 Point
1 Point
1 Point

10. 3. A: Plotted Graph MC ATC AVC AFC 5 Point Total Cost/Price Quantity
1 point- Correctly labeled axis with numbers
1 point- Correctly plotted MC
1 point- Correctly plotted ATC
1 point- Correctly plotted AVC
1 point- Correctly plotted AFV MC
ATC
AVC
Cost/Price
AFC
Quantity

11. Question #3B 5 Point Total MC1 MC ATC1 AVC1 ATC AVC AFC
1 Point- Cory’s MC, ATC, and AVC curves would increase.
1 Point- Fixed costs will not change
1 Point- Each correct shift
Question #3B
MC1 MC
ATC1
AVC1
ATC
AVC
Costs (dollars)
AFC
Quantity

12. Question 3.C. OR 5 Point Total 1 point- Output = 7 surfboards
1 point- Explanation- Cory should produce where MR=MC to maximize profits
2 point- $65.71 Profit per Unit
1 point- Explanation- Cory is selling each unit for $150 and his cost for each surfboard is $84.29. OR
Total Profit equals TR ($1050)- TC ($590)= $460
$460 divided by 7 equals $65.71

13. 4. Practice FRQs

14. 5. Perfect Competition
10 Points Total

15. 5 Points- Long Run to Short-Run 5 Points- Short-run back to Long-runMC
ATC
$10
$10
MR=D D Q
5000 8 Q
Industry
Firm 15
Copyright
ACDC Leadership 2015

16. Demand Increases The price increases and quantity increases
Profit is made in the short-run P S P MC
ATC
$10
$10
MR=D $5 $5
MR1=D1 D D1 Q
5000 7 8 Q
Industry
Firm 16
Copyright
ACDC Leadership 2015

17. Demand Increases The price increases and quantity increases
Profit is made in the short-run S1 P S P MC
ATC
$10
$10
MR=D $5
$15
MR1=D1 D D1 Q
3000
5000 7 8 Q
Industry
Firm 17
Copyright
ACDC Leadership 2015

18. Demand Increases The price increases and quantity increases
Profit is made in the short-run S1 P P MC
ATC
$10
$10
MR=D D1 Q
3000 8 Q
Industry
Firm 18
Copyright
ACDC Leadership 2015