Exam 4 Flashcards
Julia prepares tax returns and does bookkeeping. Last year her revenues from the tax and bookkeeping business were $150,000, and her expenses for the business were $15,000. When she started her tax and bookkeeping business, Julia gave up her supplemental job doing in-home per sitting. She used to earn $10,000 per year from pet sitting. Assume that she incurred no costs for her pet sitting business. Julia’s explicit costs are?
$0
$10,000
$15,000
$25,000
$15,000
What is total output when 5 workers are hired?
40 units
negative 10 units
185 units
225 units
none of the above
225 units
Joan grows pumpkins. If Joan plants no seeds on her farm, she gets no harvest. If she plants 1 bag of seeds, she hets 500 pumpkins. If she plants 2 bags, she gets 800 pumpkins. If she plants 3 bags, she gets 900 pumpkins. A bag of seeds costs $100, and seeds are her only cost. Joan’s production function exhibits
increasing marginal product
decreasing marginal product
constant marginal product
any of the above could be correct
decreasing marginal production
What is the firm’s fixed cost?
$0
$20
$50
$70
none of the above
$50
What is the fixed cost per bowl ( AFC ) when 2 workers are hired?
$50 per bowl
$0.29 per bowl
$25 per bowl
$0.53
none of the above
$0.29 per bowl
If the firm can sell its output for $1 per unit, what is the profit-maximizing level of output?
240 units
230 units
190 units
170 units
230 units
Each worker at Casa Bonita costs $12 per hour. The cost of each oven is $20 per day regardless of the number of tacos produced. What is the total daily cost of producing at a rate of 55 tacos per hour if the restaurant operates 8 hours per day?
$480
$576
$520
$616
none of the above
$520
The average total cost curve for plants A, B, C and D are shown in the attached figure. Which plant is best to use to produce 60 units per day? ( I.e/ which plant would minimize the cost per unit - the ATC? )
plant A
plant B
plant C
plant D
plant B
In the above figure, the long-run average cost curve exhibits diseconomies of scale
between 5 and 10 units per hour
between 10 and 20 units per hour
between 20 and 25 units per hour
along the entire curve
between 20 and 25 units per hour
The table represents a demand curve faced by a restaurant in a competitive market. For this firm, the price is
$39
$26
$13
$0
none of the above
$13
If the market price is less than P2, in the short run, the perfectly competitive firm will earn
positive economic profit
negative economic profit but continue producing output
negative profit and shut down
zero economic profit
negative economic profit and shut down
If the market price is P3, in the short run, the perfectly competitive firm will earn
positive economic profit
negative economic profit but continue producing output
negative economic profit and shut down
zero economic profit
zero economic profit
If the market price is less than P3 and greater than P2, in the short run, the perfectly competitive firm will earn
positive economic profit
negative economic profit but continue to produce output
negative economic profit and shut down
zero economic profit
negative economic profit but continue to produce output
Suppose that a firm operating in perfectly competitive market sells 100 units of output. Its total revenues from the sale are $500. Which of the following statements is correct?
(i) Marginal revenue equals $5
(ii) Average revenue equals $5
(iii) Price equals $5
(i) only
(iii) only
(i) and (ii) only
(i), (ii), and (iii)
(i), (ii), and (iii)
In a competitive market the current price is $5. The typical firm in the market has ATC = $5.50 and AVC = $4.50
in the short run firms will shut down, and in the long run firms will leave the market
in the short run firms will continue to operate, but in the long run firms will leave the market
new firms will likely enter thus market to capture any remaining economic profits
the firms will earn zero economic profits in both the long run and short run
in the short run firms will continue to operate, but in the long run firms will leave the market
At the profit-maximizing output level, the firm earns
zero economic profit
a profit of $600
a profit of $1,200
a profit of $2,700
a profit of $2,700
If the market price is $10, what is the competitive firm’s total cost?
$18
$30
$35
$50
$15
$35
At price P4, the firm would produce
Q3 units
Q4 units
Q5 units
Q6 units
Q4 units
If the market price is $6.30, in the long run,
new firms will enter the market
existing firms will exit the market
firms will neither exit nor enter the market
not enough information to answer the question
firms will neither exit nor enter the market
If the firm’s average total cost is ATC1, the firm will
suffer a loss
break even
make a profit
face competition
make a profit
How does the monopolist’s quantity compare to the socially efficient quantity?
the monopolist produces 560 units fewer than the socially efficient quantity
the monopolist produces 140 units less than the socially efficient quantity
the monopolist produces 340 units less than the socially efficient quantity
the monopolist produces 220 units less than the socially efficient quantity
the monopolist produces 340 units less than the socially efficient quantity
What is the total revenue for the monopolist?
$1,860
$1,488
$1,826
$1,116
none of the above
$1,488
When producing the profit-maximizing output, what is the amount of the firm’s profit?
$335
$350
$880
$910
$350
What price/quantity combination will the monopolist use to maximize profit?
$18, 62 units
$22, 83 units
$24, 62 units
$30, 62 units
none of the above
$24, 62 units
What is the deadweight loss due to the monopolist’s price/quantity combination?
$1,000
$500
$4,000
$2,000
$500
