Question

Gordon is a senior majoring in computer network development at Smart State University. While he has been attending college, Gordon started a computer consulting business to help senior citizens set up their network connections and teach them how to use e-mail. Gordon charges $25 per hour for his consulting services. Gordon also works 5 hours a week for the Economics Department to maintain that department's Web page. The Economics Department pays Gordon $20 per hour. From this information we can conclude: Select one: O a. Gordon should increase the number of hours he works for the Economics Department to make it comparable to his consulting business income. b. Gordon is obviously not maximizing his well-being if he continues to work for the Economics Department. O c. If Gordon chooses one hour at the beach with his friends rather than spend one more hour with a consulting client, the forgone income of $25 is considered a cost of the choice to go to the beach. O d. Both b and c are correct Diseconomies of scale occur when Select one: a. average fixed costs are falling. b. average fixed costs are constant. Oc. long-run average total costs rise as output increases. d. long-run average total costs fall as output increases.

please answer two questions
thank you

Answer 1

Ans:

1) Option D

Both b and c are correct

Gordon is not maximizing his well being as he is working at $20 per hour.

Opportunity cost is the benefit forgone.The income of $25 forgone is a cost of the choice to go to the beach.

2) Option C

long run average total costs rise as output increases.

Diseconomies of scale occur when costs per unit increases as output increases.