ECON 201: Exam 2 Aplia
Which of the following would not appear on a firm's accounting statement? a. Fixed costs b. Insurance costs c. Explicit costs d. Sunk costs e. Implicit costs
e
Fernando allocates his lunch money between pizza and Coke. A slice of pizza costs $1.50 and a can of Coke costs $1. The marginal utility of the last slice of pizza Fernando ate that day was 30 units, and the marginal utility of the last can of Coke was 25 units. If Fernando decides to spend all of his lunch money, then identify the correct statement. a. Fernando could have increased his total utility by purchasing more Coke and the same quantity of pizza. b. Fernando could have increased his total utility by purchasing more pizza and the same quantity of Coke. c. Fernando allocates his money so as to maximize his total utility. d. Fernando's total utility would have been greater if he had purchased more pizza and less Coke. e. Fernando's total utility would have been greater if he had purchased more Coke and less pizza.
e
Figure 7.1 shows the U-shaped cost curves for a producer. In the table figure, A is the marginal cost curve, B is the average variable cost curve, and C is the average total cost curve. At an output of 10, the: a. fixed cost equals $10. b. total cost equals $10. c. fixed cost equals $1. d. marginal cost equals $10. e. variable cost equals $10.
e
Suppose John goes to a wedding reception where free drinks are served. He will drink until the marginal utility of an additional drink is _____. a. infinite b. less than zero c. greater than one d. one e. zero
e
Terry consumes three hamburgers at McDonald's. He figures out that the last hamburger he ate was just worth the price he paid for it. If the price of a hamburger is $1, _____. a. he has a consumer surplus on the third hamburger alone b. he has a consumer surplus on the first hamburger c. he would have a consumer surplus if he eats one more hamburger d. he has no consumer surplus e. he has a consumer surplus on the first two hamburgers
e
The following image shows the market equilibrium for opera tickets. The graph shows that a demand curve for opera tickets, labeled D and a supply curve of opera tickets, labeled S. Area _____ represents the maximum amount that consumers are willing to pay for 10 opera tickets?. a. a b. a + b c. c d. b e. a + b + c
e
When diminishing marginal returns set in, total product _____. a. decreases at a decreasing rate b. is negative c. decreases at an increasing rate d. increases at an increasing rate e. increases at a decreasing rate
e
"I don't feel so good; I shouldn't have had that last doughnut." Which of the following supports this statement? a. The marginal utility of doughnuts is still increasing. b. The total utility from eating doughnuts is negative. c. The marginal utility of the last doughnut was positive. d. The marginal utility of the next doughnut will be positive. e. The marginal utility of the last doughnut was negative.
e
A farmer in the Midwest who produces wheat faces a horizontal demand curve because: a. he produces a good that no other firm in the market produces. b. the quantity supplied by him is so large relative to the market that it has no impact on the market price for wheat. c. he produces a good for which there are no substitutes. d. he produces a good for which there are no complements. e. the quantity supplied by him is so small relative to the market that it has no impact on the market price for wheat.
e
Firms achieve productive efficiency by: a. producing at their minimum long-run marginal cost. b. striving to maximize their total revenue. c. striving to minimize their fixed cost. d. producing the products that have no substitute. e. producing at their minimum long-run average cost.
e
If Joel buys ten floppy disks, which are worth a total of $30 to him, and he pays $1 per disk, his consumer surplus is: a. $24. b. $10. c. $15. d. $30. e. $20.
e
If a good is offered free of charge, one would: a. stop consuming it when its marginal utility begins to increase. b. never consume it because it has no market value. c. never stop consuming it. d. stop consuming it when its marginal utility begins to fall. e. stop consuming it when its marginal utility has declined to zero.
e
If marginal cost is less than average total cost, then: a. average variable cost must equal average total cost. b. average total cost must be increasing. c. average variable cost must be decreasing. d. marginal cost must be falling. e. average variable cost may be increasing or decreasing.
e
If total cost at Quantity = 0 is $100 and total cost at Quantity = 10 is $500, then average variable cost at Quantity = 10 is _____. a. $50 b. $10 c. $500 d. $400 e. $40
e
Maryann and Don want to open their own deli. To do so, Maryann must give up her job, where she earns $20,000 per year, and Don must give up his part-time job, where he earns $10,000 per year. They must liquidate their money market fund, which earns $1,000 interest annually. The rent on the building is $10,000 per year, and the expenses of such necessities as utilities, corned beef, and pickles are $35,000 annually. The minimum amount of revenue per year that would make it worthwhile, financially, for Maryann and Don to run the deli is _____. a. $10,000 b. $31,000 c. $35,000 d. $45,000 e. $76,000
e
The figure given below shows the demand and the cost curves of a perfectly competitive firm. Total revenue at the profit-maximizing output equals _____. a. $2,400 b. $4,000 c. $6,000 d. $5,200 e. $5,600
e
The following figure shows the demand and the cost curves of a perfectly competitive firm. At the profit-maximizing output level, the firm experiences: a. a loss of $800. b. a loss of $3,200. c. a profit of $1,600. d. zero profit or loss. e. a profit of $1,200.
e
The length of time that represents the long run: a. is greater than six months. b. is the same for all industries. c. is greater than one year. d. is longer in service industries than in manufacturing. e. varies from industry to industry.
e
The price charged by a perfectly competitive firm is determined by: a. a group of firms acting together as a cartel. b. the firm's total costs. c. the firm's average variable cost. d. each individual firm. e. market demand and market supply
e
Which of the following is not an explicit cost? a. Sales taxes b. Salaries c. Insurance premiums d. The cost of utilities, such as gas and electricity e. The value of a firm owner's time
e
As output rises, marginal product eventually diminishes and _____. a. marginal cost increases b. average cost falls c. total cost falls d. average product is negative e. fixed cost is increasing
a
Consider the following figure that shows a competitive firm on the left panel and a competitive market on the right panel. Assuming all the firms in the market are identical, there are _____ firms in this industry. a. 50 b. 2,000 c. 40 d. 60 e. 2,500
a
Diminishing marginal utility means that: a. as one consumes more of a good, other things constant, the additional satisfaction obtained from each additional unit of the good tends to fall. b. as one consumes more of a good, other things constant, the total satisfaction obtained from consuming the good tends to fall. c. as one consumes more of a good, other things constant, the extra satisfaction obtained from each extra good becomes negative. d. as one hires more labor, other things constant, the total amount of output produced begins to fall. e. as one hires more units of labor, other things constant, the marginal product of labor begins to fall.
a
If Jennie spends her income on ice cream and biscuits and the price of ice cream is three times the price of biscuits, then: a. she buys biscuits and ice cream until the marginal utility of ice cream is three times the marginal utility of biscuits. b. she maximizes her utility by buying equal quantities of ice cream and biscuits. c. she maximizes her utility by buying three times as much ice cream as biscuits. d. she maximizes her utility by buying three times as many biscuits as ice cream. e. she buys biscuits and ice cream until the marginal utility of biscuits is three times the marginal utility of ice cream.
a
The following diagram shows a market equilibrium. D is the demand curve for a good and S is the supply curve of the good. The consumer surplus at a price of $b is given by the area: a. below the curve D and above the market price of $b. b. above the curve D. c. below the curve S. d. below the curve D and above the curve S. e. below the curve D and above the market price of $d.
a
The following diagram shows the market demand schedule for a good. When the price of the good is P, the shaded area represents: a. consumer surplus. b. marginal utility of the good. c. shortage. d. marginal valuation of the good. e. price floor.
a
The following table shows the total utility and marginal utility derived from the consumption of scones. The first column of the table represents the number of scones a consumer consumes in a day. The second column of the table presents the total utility derived from that consumption, and the third column shows the marginal utility of each additional scones. The marginal utility of the second scone is _____ units. Table 6.3 Scones Total utility Marginal utility 1 10 - 2 18 - 3. 24 6 4 28 - 5 30 2 a. 9 b. 8 c. 6 d. 19 e. 12
a
As a consumer allocates income between good A and good B, total utility is maximized when: a. marginal utility of A/price of A = marginal utility of B/price of B b. price of A = price of B c. marginal utility of A = marginal utility of B = 0 d. marginal utility of A = marginal utility of B e. marginal utility of A/price of A = marginal utility of B/price of B = 0
a
If a firm is producing at an output level where the total revenue curve intersects the total cost curve, which of the following is true of the firm? a. Its profit is zero. b. Its cost is maximized. c. Its cost is minimized. d. Its revenue is maximized. e. Its profit is maximized.
a
Marginal utility is the: a. additional satisfaction obtained from consuming one more unit of a good. b. additional cost of purchasing one more unit of a good. c. average satisfaction obtained from consuming a good. d. overall satisfaction obtained from consuming a good. e. increase in satisfaction that results from consuming 1 percent less of a good.
a
Resources are efficiently allocated when production occurs at that point at which: a. price is equal to marginal cost. b. price is equal to average variable cost. c. the marginal cost curve intersects the average variable cost curve. d. the marginal revenue curve intersects the average variable cost curve. e. price is equal to average revenue.
a
Suppose Ripco owns the building from which it operates. If: a. its usage of the building precludes it from renting to anyone else, there is an opportunity cost. b. the firm pays rent, there is an opportunity cost. c. the firm pays no rent, there is no opportunity cost. d. the firm does not rent the building to anyone else, there is no opportunity cost. e. the firm can use the building for other things, there is no opportunity cost.
a
Suppose a perfectly competitive firm and industry is in long-run equilibrium and the firm earns an economic profit in the short run. Which of the following is likely to occur in the long run? a. The market supply curve will shift to the right, and the market price will decrease. b. The market supply curve will shift to the left, and the market price will increase. c. The firm will continue to earn economic profit. d. There will be an increase in the amount of economic profit earned by the firm. e. Industry output will decrease.
a
The following figure shows the total cost and total revenue curves of a firm. The firm maximizes profit at an output represented by _____. a. point c b. point d c. a point beyond point d d. point a e. point b
a
The law of diminishing marginal returns states that: a. as units of a variable input are added to a given amount of fixed inputs, the marginal product of the variable input eventually diminishes. b. as a person consumes more of a good, the marginal satisfaction from that good eventually diminishes. c. if marginal product is positive, total product rises. d. long-run average cost declines as output increases. e. if the marginal product is above the average product, the average will rise.
a
The short run is a period of time: a. during which at least one resource is fixed. b. equal to or less than six months. c. during which at least one resource may be varied. d. during which all resources may be varied. e. during which all resources are fixed.
a
Total cost is calculated as _____. a. fixed cost plus variable cost b. the additional cost of the last unit produced c. average fixed cost plus average variable cost d. marginal cost plus fixed cost e. marginal cost plus variable cost
a
Increasing marginal returns are generally the result of _____. a. labor unions b. the specialization and division of labor c. change in technology d. diseconomies of scale e. increasing costs
b
Mark's marginal utility of a third waffle is 10 units and marginal utility of a second slice of ham is 30 units. If Mark eats the third waffle, which of the following statements is true? a. The price of a waffle is five times more than the price of a slice of ham. b. The price of a waffle is less than one-third the price of a slice of ham. c. The price of a waffle is four times more than the price of a slice of ham. d. The price of a waffle is three times more than the price of a slice of ham. e. The price of a waffle is less than one-fourth the price of a slice of ham.
b
The following image shows the demand curve for neckties. At point a, consumer surplus is _____. a. $5 b. $8 c. $20 d. $26 e. $0
b
Which of the following is not necessarily a characteristic of a perfectly competitive market structure? a. Easy entry and exit in the long run b. Low prices c. Perfect information d. A homogeneous product e. A large number of buyers and sellers
b
For a perfectly competitive firm, ____. a. price is less than marginal revenue at all output levels b. price equals marginal revenue at all output levels c. price exceeds marginal revenue at all output levels d. price is less than marginal revenue only at the profit-maximizing quantity e. price equals marginal revenue only at the profit-maximizing quantity
b
If a firm shuts down in the short run and produces no output, its total cost will be: a. equal to only explicit costs. b. equal to the fixed cost. c. equal to the variable cost. d. equal to the sum of implicit and explicit costs. e. equal to zero.
b
In the short run, if a firm shuts down, its loss is equal to: a. its variable cost. b. its fixed cost. c. zero. d. its fixed cost minus total revenue. e. its fixed cost minus its variable cost.
b
Suppose Sally allocates her budget between two goods, A and B. She spends her entire income on a combination of A and B, for which the ratio of marginal utility of good A to its price exceeds the ratio of marginal utility of good B to its price. She can increase her total utility by buying: a. more B and less A. b. more A and less B. c. more B and more A. d. less B without changing her consumption of A. e. more A without changing her consumption of B.
b
Suppose a perfectly competitive constant-cost industry is in long-run equilibrium when market demand increases. What will probably happen to a firm in this industry in the long run? a. The equilibrium price will be higher in the long run. b. There will be no change in the equilibrium price and quantity supplied by the firm. c. It will charge the same equilibrium price but will reduce its output. d. It will experience higher average total costs and will reduce its output. e. The equilibrium price will be lower in the long run.
b
Suppose the marginal utility of a unit of good x = MUx, the marginal utility of a unit of good y = MUy, Px= price of a unit of good x, and Py= price of a unit of a good y. A utility-maximizing consumer who purchases two goods, x and y, allocates her budget in such a way that _____. a. MUx = MUy b. TUx/Py = TUy/Px c. MUx/Px = MUy/Py d. TUx = TUy e. MUx/Py = MUy/Px
b
The demand curve facing a perfectly competitive firm is: a. upward sloping. b. a horizontal straight line at the market price. c. vertical at the equilibrium quantity. d. a straight line through the origin. e. downward sloping.
b
The table given below shows the output supplied by a firm and its total cost of production. If the market price is $8.50, the profit-maximizing output and profit are _____. Quantity of output. Total Cost ($) 0 50 10 85 20 150 30 220 40 305 50 455 a. 40 units and $0, respectively b. 40 units and $35, respectively c. 50 units and $30, respectively d. 0 units and −$50, respectively e. 30 units and $25, respectively
b
Which of the following is true of the total revenue curve of a perfectly competitive firm? a. The slope of the curve decreases as output increases. b. The slope of the curve remains constant slope as output increases. c. It is horizontal. d. The slope of the curve increases as output increases. e. It is vertical.
b
Claude's Copper Clappers sells clappers for $40 each in a perfectly competitive market. At its present level of output, Claude's marginal cost is $39, average variable cost is $45, and average total cost is $60. To improve his profit or loss situation, Claude should: a. increase the price. b. continue to produce the present level of output. c. shut down. d. increase output. e. reduce output but not to zero.
c
Elvis values the first gravy sandwich at $5, the second at $4.50, the third at $4. If he buys three for $4 each, his consumer surplus has a value of: a. $4. b. $9.50. c. $1.50. d. $12. e. $5.
c
Negative marginal utility implies that: a. the price of a good increases as additional units are consumed. b. total utility is negative. c. total utility decreases as additional units of a good are consumed. d. the total revenue spent by a consumer on a good decreases as more of the good is purchased. e. marginal utility increases as additional units of a good are consumed.
c
Table 7.2 shows labor and the quantity of shoes produced by a firm. Given the information in the table below, _____ is the average product of the third unit of labor. Labor Total product (pairs of shoes) 0 0 1 20 2 50 3 75 4 80 5 75 a. 15 pairs of shoes b. 10 pairs of shoes c. 25 pairs of shoes d. 45 pairs of shoes e. 75 pairs of shoes
c
The additional output obtained by adding another unit of labor to the production process is called _____. a. the marginal cost of labor b. a variable cost c. the marginal product of labor d. the average output of labor e. the marginal utility of labor
c
The following diagram shows a consumer's demand schedule for a good. At a price of $2, consumer surplus is: a. $200. b. $5. c. $80. d. $10. e. $4.
c
The following graph shows the marginal utility derived by a consumer from watching an additional baseball game every month. Which of the following is true of the total and marginal utilities derived from watching the baseball games? a. For all the ten games, total utility decreases as marginal utility decreases. b. For all the ten games, total utility increases as marginal utility increases. c. For the first six games, total utility increases as marginal utility decreases. d. For the first six games, total utility decreases as marginal utility increases. e. For the last four games, both total and marginal utility increases.
c
When total utility falls, marginal utility is _____. a. at its maximum b. positive c. negative d. infinite e. zero
c
A firm's opportunity costs of using resources provided by the firm's owners are called _____. a. entrepreneurial costs b. explicit costs c. implicit costs d. fixed costs e. sunk costs
c
A perfectly competitive firm sells 200 units at a market price of $40 per unit. Its marginal cost is $50, and it incurs a variable cost of $10,000. To improve its profit or loss situation, this firm should _____. a. continue to produce the present level of output b. reduce output but not to zero c. shut down d. increase output sold to 300 units e. raise the price to $45 per unit
c
A perfectly competitive firm that earns an economic profit in the short run choose the output that: a. maximizes the difference between total revenue and implicit cost. b. minimizes its total cost. c. maximizes the difference between total revenue and total cost. d. maximizes its total revenue. e. maximizes the difference between total revenue and explicit cost.
c
A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $20,000 a year, and take over a building that he owns and currently rents to his brother for $6,000 a year. His expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity. The chef's explicit costs are equal to_____. a. $66,000 b. $78,000 c. $52,000 d. $72,000 e. $26,000
c
Consider the following figure that shows the demand and the cost curves of a perfectly competitive firm. At a market price of P1, the profit-maximizing quantity for the firm is _____. a. e units of output b. a units of output c. d units of output d. b units of output e. between d and e units of output
c
If a shoe store earns more than a normal profit, its: a. accounting profit is zero. b. accounting profit is less than its economic profit. c. economic profit is positive. d. economic profit must be greater than its accounting profit. e. economic profit is, therefore, equal to its accounting profit.
c
Annie reallocates her budget until the ratios of marginal utilities of goods equal the ratios of their prices. Which of the following is true of Annie's behavior? a. She ensures that her marginal utility from each good is less than that good's marginal cost. b. She adjusts her baskets of goods until marginal utilities of all goods become negative. c. She ensures that her expected marginal utilities from goods are equal to zero. d. She maximizes her total utility derived from the consumption of goods. e. She maximizes her marginal utilities from goods and minimizes her disutility from consumption.
d
Economic profit is defined as _____. a. total revenue plus explicit costs b. wages plus interest minus rent c. total revenue plus implicit costs d. total revenue minus implicit and explicit costs e. total revenue minus implicit costs
d
In Connecticut, the market for apples is perfectly competitive. Suppose consumers' tastes change so that the market demand for apples increases. In this case, the demand curves faced by individual firms will: a. not change. b. become upward sloping. c. shift downward. d. shift upward. e. become less elastic
d
Suppose Debbie is willing to pay $50 for a pair of shoes but has to pay $20 because the shoes are on sale. Her consumer surplus is: a. $20. b. $50. c. $70. d. $30. e. $25.
d
Table 7.3 shows the number of workers and total output produced in a firm. In the table below, diminishing marginal returns set in with the addition of the _____. Number of workers Total output 0 0 1 10 2 40 3 100 4 140 5 160 6 170 7 150 a. fifth worker b. seventh worker c. third worker d. fourth worker e. first worker
d
The following table indicates Sharona's marginal utilities from the additional consumption of goods A and B. The first and third columns of the table show the quantities of goods A and B consumed. The second and the fourth columns show Sharona's marginal utilities from each additional unit of goods A and B consumed. The price of A is $2 per unit and the price of B is $4 per unit. If Sharona's budget is $12, then which of the following combinations would maximize her total utility? QA MUA QB MUB 1 24 1 48 2 22. 2 44 3 18. 3. 36 4. 12. 4. 24 a. 1 unit of A; 4 units of B b. 4 units of each good c. 4 units of A; 1 unit of B d. 2 units of each good e. 0 units of A; 3 units of B
d
The following table shows John's total utility derived from billiards and bowling games. Assume John has $30 to spend on a game of billiards and/or a game of bowling. A game of billiards costs him $4, and a game of bowling costs him $2. Which of the following is John's utility-maximizing combination of the games of billiards and the games of bowling? Quantity Total Utility Games of billiards Games of bowling 0 0 0 1 100 70 2 180 130 3 240 180 4 272 210 5 288. 218 6 292. 222 a. Twelve games of bowling b. Five games of billiards and two games of bowling c. Four games of billiards and four games of bowling d. Five games of billiards and five games of bowling e. Three games of billiards and eight games of bowling
d
Which of the following is true of marginal product? a. When marginal product is positive and decreasing, total product is decreasing. b. When marginal product is increasing, total product is decreasing. c. When marginal product is positive and decreasing, total product is increasing by increasing amounts. d. When marginal product is increasing, total product is increasing by increasing amounts. e. When marginal product is negative, total product is increasing.
d
Figure 7.1 shows the U-shaped cost curves for a producer. In the figure below, A is the marginal cost curve, B is the average variable cost curve, and C is the average total cost curve. The vertical distance between lines B and C at any level of output represents _____. a. average total cost b. average marginal cost c. marginal cost d. average fixed cost e. average variable cost
d
If variable cost rises from $60 to $100 as output increases from 15 to 20 units, the marginal cost of the twentieth unit is _____. a. $40 b. $5 c. $58 d. $8 e. $100
d
Long-run equilibrium for a perfectly competitive firm occurs when: a. Marginal cost (MC) = Marginal revenue (MR) = Price (P) > Long-run average cost (LRAC). b. Marginal cost (MC) = Marginal revenue (MR) = Average fixed cost (AFC) = Short-run average total cost SRATC. c. Marginal cost (MC) = Marginal revenue (MR) = Average fixed cost (AFC) = Long-run average cost (LRAC). d. Price (P) = Marginal cost (MC) = Short-run average total cost (SRATC) = Long-run average cost (LRAC). e. Price (P) = Marginal revenue (MR) = Long-run average variable cost (LRAVC) = Long-run average cost (LRATC).
d
Marginal cost eventually increases as output increases due to the effect of _____. a. constant fixed cost b. economies of scale c. increasing total cost d. diminishing marginal product of inputs e. increasing average cost
d
Table 7.2 shows labor and the quantity of shoes produced by a firm. Given the information in the table below, _____ is the marginal product of the third unit of labor. Labor Total product (pairs of shoes) 0 0 1 20 2 50 3 75 4 80 5 75 a. 75 pairs of shoes b. 50 pairs of shoes c. 45 pairs of shoes d. 25 pairs of shoes e. 15 pairs of shoes
d
The Hound Dog Bus Company contemplates expanding its New Mexico operations by offering services from Raton to Santa Fe. It has estimated that the total cost of the trip will be $400, of which $150 is the fixed cost, which it has already paid. The company expects an increase in revenue by $275 from the trip. The Hound Dog Bus Co. should: a. offer this service because it will earn a positive economic profit. b. not offer this service because marginal revenue is less than marginal cost. c. not offer this service because total cost exceeds total revenue. d. offer this service because the additional revenue exceeds the additional cost of this service. e. offer this service because total revenue exceeds fixed cost.
d
The average total cost curve and the average variable cost curve: a. are closer together as output increases, with average total cost reaching its minimum level first. b. are parallel to each other and reach their minimum levels at the same rate of output. c. are farther apart as output increases, with average total cost reaching its minimum level first. d. are closer together as output increases, with average variable cost reaching its minimum level first. e. are farther apart as output increases, with average variable cost reaching its minimum level first.
d
The long-run supply curve for a constant-cost perfectly competitive industry is _____. a. perfectly inelastic b. relatively inelastic c. a ray from the origin at a 45-degree angle d. perfectly elastic e. downward sloping
d
"The second glass of Evian water was very good. May I have another?" Which of the following is necessarily true regarding this statement? a. The marginal utility of the first glass of water was zero. b. The marginal utility of the third glass of water will be negative. c. The marginal utility of the second glass of water was negative. d. The water is available free of cost. e. The marginal utility of the second glass of water was positive.
e
Consider the following figure that shows the demand and the cost curves of a perfectly competitive firm. The firm will earn zero economic profit _____. a. at a price of P3 b. at a price between P1 and P2 c. at a price of P1 d. at a price above P1 e. at a price of P2
e
The following diagram shows the demand curve for neckties. At point a, total expenditure on neckties is: a. $45. b. $20. c. $9. d. $5. e. $26.
b
A firm in a perfectly competitive market: a. can decrease its supply to increase the market price. b. can increase its supply to lower the market price. c. has to accept the market price for its product. d. has to lower the price of its product to sell more output. e. can raise the price of its product and sell more output.
c
A variable cost is one that changes _____. a. only in the short run b. month to month c. as output changes d. only in the long run e. year to year
c
A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $20,000 a year, and take over a storage building that he owns and currently rents to his brother for $6,000 a year. His expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity. The chef's implicit costs are equal to _____. a. $26,000 b. $52,000 c. $66,000 d. $78,000 e. $72,000
a
A perfectly competitive firm is currently producing at a point where price is $10 and both marginal cost and average variable cost are $7. To maximize profit or minimize loss in the short run, this firm should: a. shut down. b. increase its output. c. raise its price. d. reduce its output. e. lower its price.
b
Consider the following figure that shows the demand and the cost curves of a perfectly competitive firm. If the price-taking firm is currently producing 6 units, it should _____ to maximize profit in the short run. a. decrease production below 6 units b. increase production to 12 units c. increase production to 8 units d. keep producing 6 units e. increase production to 14 units
b
Consumer surplus is: a. the amount by which quantity supplied exceeds quantity demanded at the current market price. b. valued by the difference between the maximum price consumers are willing to pay and the amount they actually pay. c. the change in total utility derived from a one-unit change in the consumption of a good. d. the amount by which quantity demanded exceeds quantity supplied at the current market price. e. the horizontal sum of the individual demand curves for all consumers in the market.
b
If a manufacturer shuts down in the short run, it must be true that before the shutdown, at all positive output levels, _____. a. profit was zero b. variable cost was greater than total revenue c. total cost plus total revenue was less than profit d. average total cost was less than average variable cost e. fixed cost was greater than total revenue
b
