Econ Unit 3

Bubba is a shrimp fisherman who catches 4,000 pounds of shrimp per year. He can sell the shrimp for $5 per pound. His average total cost of catching shrimp is $3 per pound. Bubba's annual Total Revenue is..

$8,000

Katherine gives piano lessons for $15 an hour. She also grows flowers, which she arranges and sells at the local farmer's market. One day she spends 5 hours planting $50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $150 at the farmer's market. What are her accounting and economic profits?

Accounting= $100; Economic= $25

Assuming that explicit costs are positive...

Economic profit is greater than accounting profit

Charlene sells cotton candy. The cotton candy industry is competitive. Charlene hires a business consultant to analyze her company's financial records. the consultant recommends that charlene increase her production. The consultant must have concluded that Charlene's

Marginal revenue exceeds her marginal cost

In a perfectly competitive market,

No one seller can influence the price of the product

Marginal cost is equal to

TC/Q

The Average Variable Cost (AVC) curve is what shape?

U-Shaped

The average Total Cost (ATC) curve is what shape?

U-Shaped

in a market with a fixed number of firms, as long as price is

above average total cost (ATC), each firm's marginal- cost curve is its supply curve

If marginal cost is equal to average total cost (ATC), then

average total cost (ATC) is minimized

a competitive firm is currently producing a quantity of output at which marginal revenue exceeds marginal cost. In order to increase profit, the firm should

decrease its total cost

In the long run, the number of firms in a competitive industry is

increasing

Laura is a gourmet chef who runs a small catering business in a competitive industry. Laura specializes in making wedding cakes. Laura sells 20 wedding cakes per month. Her monthly total revenue is $5,000. The marginal cost of making a wedding cake is $200. In order to maximize profits, Laura should

make more than 20 units of the good per month.

Firms that operate in perfectly competitive markets try to

maximize profits

For a firm, marginal revenue minus cost is equal to...

profit