Question

1. Explain how marginal costs, direct costs and opportunity costs are different. Use an example from your personal life to illustrate each concept.
2. Do you agree with Robert Moses’ ideas of wiping out cities that are an "impediment to new growth"? (see Scarcity and Eminent Domain) Why or why not?
3. Using Table 1, create one graph that illustrates all three lawnmowers’ Marginal Costs (Beth, Jim and Susan).
4. Using Table 1, for each mower, identify if the Marginal Cost and Total Cost is increasing, constant, or decreasing.

Table 1 Beth's Jim's Susan's Quantity Beth's marginal Jim's marginal Susan's margina of lawns total cost of total COst of total cost of mowedostlawns ostwns cost lawns mowed mowed mowed S20 S10 20 10 15 35 20 10 10 10 45 17 15 32 20 52 52 82

Answer 1

Marginal cost refers to the cost required to produce an additional unit of good. Eg: Suppose I work in a construction company. The marginal cost of producing an extra unit of good there would include the cost given to workers in form of wages, raw materials would be used and so on. So these are the additional cost to produce one extra good.

Opportunity cost is the cost of giving up the next best alternative for the current choice. Eg: if I wish to take a leave and go for skiing, then the wages I give up are the opportunity cost for enjoying skiing.

Direct cost are the costs which are directly placed on the goods in form of prices. These are directly attributable to the good. Eg: if I am a supervisor in a construction firm, then mybwages is the direct cost of supervision which is paid by the company.

Impediment refers to a person or thing which makes development difficult. The word is used in the context of cities and growth. Robert moses focuses on the idea of removing the cities that are creating difficulty in making progess or growth.

Development is required in every phase of the country. If a city is impediment to new growth , then it is stopping a part of country to develop which would be an hindrance to the overall economy. Technology upgradation, better utilisation of resources , adoption of cleaner fuels etc is the new growth which is essential for any community to survive. If the city is resisting such measures, it is better to wipe out those cities.

Given below is the graph showing the marginal costs of all the: Beth,Jim and Susan.

In Beth' s case both marginal cost is reducing while the total cost is increasing at a decreasing rate.

In Jim's case , the marginal cost is constant, so the total cost is increasing at a constant rate.

In Susan's case, the marginal cost is increasing which implies that the total cost is increasing at an increasing rate.

(You can comment for doubts)