ECON test #2

Refer to the data. The marginal revenue of the fourth unit of output is: 14 1 12 2 10 3 8 4 6 5 4 6 2 7

$2

Suppose that a pure monopolist can sell 5 units of output at $4 per unit and 6 units of output at $3.90 per unit. The monopolist will produce and sell the sixth unit if its marginal cost is:

$3.40 or less

Assume labor is the only variable input and that an additional input of labor increases total output from 72 to 78 units. If the product sells for $6 per unit in a purely competitive market, the MRP of this additional worker is:

$36

Refer to the diagram. At the profit-maximizing output, total revenue will be:

0AHE

***Marginal product of the 6th worker:

15 units

Suppose that a firm produces 100,000 units a year and sells them all for $5 each. The explicit costs of production are $350,000 and the implicit costs of production are $100,000. The firm has an accounting profit of

150,000 and a economic profit of 50,000

***Average product is at maximum when:

2 workers

A monopolistic firm has a sales schedule such that it can sell 9 prefabricated garages per week at $10,000 each, but if it restricts its output to 8 per week it can sell these at $11,000 each. The marginal revenue of the 9th unit of sales per week is:

2,000

Refer to the data. If the firm's minimum average variable cost is $10, the firm's profit-maximizing level of output would be:

3

Refer to the data. If the firm is hiring workers under purely competitive conditions at a wage rate of $22, it will employ:

3 workers

The profit-maximizing output and price for this monopolist would be

6 unites and 400

A pure monopolist is producing an output such that ATC=$20, P=$25, MC=$4, and MR=$5. This firm is realizing:

An economic profit that could be increased by producing more output.

**Refer to the short-run data. Which of the following is correct?

Any level of output between 100 and 440 units will yield an economic profit.

1 worker 12,000; rent 5,000; spends 20,000; invested 40,000; 4,000/yr; offered 15,000; talents 3,000; revenue 72,000

Explicit: 37,000 (12+5+20) Implicit: 22,000 (4+15+3) Acc Profit: 35,000 (72-37) Economic prof: 13,000 (35-32)

If a firm decides to produce no output in the short run, its costs will be:

Its fixed costs

Refer to the diagram. This nondiscriminating monopolist will produce:

M units at price A and make a profit.

An unregulated pure monopolist will maximize profits by producing that output at which:

MR=MC

Suppose the demand for strawberries rises sharply, resulting in an increased price of strawberries. As it relates to strawberry pickers, we could expect the:

MRP curve to shift to the right

Marginal product is:

The increase in total output attributable to the employment of one more worker

Cindy is a baker and runs a large cupcake shop. She has already hired 11 employees and is thinking of hiring a 12th. Cindy estimates that a 12th worker would cost her $100 per day in wages and benefits while increasing her total revenue from $2,600 per day to $2,750 per day. Should Cindy hire a 12th worker?

Yes

A purely competitive seller is:

a price taker

Other things equal, we would expect the labor demand curve of a monopolistic seller to:

decline more rapidly than that of a purely competitive seller.

The demand curve for the pure monopolist is:

down-sloping

As the firm in the diagram expands from plant size #1 to plant size #3, it experiences:

economies of scale

To the economist, total cost includes:

explicit and implicit costs, including normal profit

Suppose that, when producing 10 units of output, a firm's AVC is $22, its AFC is $5, and its MC is $30. This:

firm's total cost is $270

Accounting profits are typically:

greater than economic profits because the former do not take implicit costs into account

The marginal revenue curve of a purely competitive firm:

is horizontal at the market price

If one worker can pick $30 worth of grapes and two workers together can pick $50 worth of grapes, the:

marginal revenue product of the second worker is $20.

Suppose that the labor cost-total cost ratio in industry A is 82 percent while in industry B it is 21 percent. Other things equal, labor demand will be:

more elastic in industry A than in B

Which of the following is not a characteristic of pure competition?

price strategies by firms

****Refer to the data. If product price is $45, the firm will:

produce 5 units and realize a $15 economic profit.

****Refer to the data. If product price is $60, the firm will:

produce 6 units and realize a $100 economic profit

Assume that a restaurant is hiring labor in an amount such that the MRC of the last worker is $16 and her MRP is $12. On the basis of this information we can say that:

profits will be increased by hiring fewer workers.

Refer to the graph. Other things equal, a decrease in the price of a substitute resource would cause a:

shift from D2 to D3 assuming the output effect exceeds the substitution effect.

****Refer to the data. If product price is $25, the firm will:

shut down and incur a $50 loss.

The labor demand curve of a purely competitive seller:

slopes downward because of diminishing marginal productivity.

In comparing the changes in TVC and TC associated with an additional unit of output, we find that:

the change in TC and TVC are equal

The marginal revenue product schedule is:

the firm's resource demand schedule.

When diseconomies of scale occur

the long-run average total cost curve rises

***Diminishing marginal returns become evident with the addition of the:

third worker

The MR = MC rule applies:

to firms in all types of industries

A firm reaches a break-even point (normal profit position) where:

total revenue and total cost are equal.

For a pure monopolist marginal revenue is less than price because:

when a monopolist lowers price to sell more output, the lower price applies to all units sold.

If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue:

will also be $5

If a nondiscriminating imperfectly competitive firm is selling its 50th unit of output for $25, its marginal revenue:

will be less than $25.

A nondiscriminating profit-maximizing monopolist:

will never produce in the output range where demand is inelastic.

Refer to the diagram. To maximize profit or minimize losses this firm will produce:

E units at price A.

In the long run:

all costs are variable costs

Refer to the diagram. At the profit-maximizing output, the firm will realize:

an economic profit of ABGH