exam 2 micro

Refer to Figure 8.8. At the market price of $8 per bushel, if this farmer produces the profit-maximizing level of soybeans, the profit would be

0

Refer to the information provided in Figure 6.1 below to answer the question(s) that follow. Figure 6.1 Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hot dog is $2.50. Tom's monthly income is

100

Refer to Table 9.1. The shutdown point for this firm is a price of

$15

Refer to the information provided in Figure 9.1 below to answer the question(s) that follow. Figure 9.1 Refer to Figure 9.1. This farmer's shutdown point is at a price of

$7

Refer to the information provided in Figure 7.4 below to answer the question(s) that follow. Figure 7.4 Refer to Figure 7.4. The average product of six workers is

8.33

What is the formula for the average product of labor?

Q/L

In perfect competition, the marginal revenue curve

and the demand curve facing the firm are identical

If revenues are greater than total variable costs of production but less than total costs, a firm

breaks even

The income elasticity of demand for low-quality beef is -2. Thus, a 5% increase in the quantity of low-quality beef demanded

incre 2.5

A movie theater charges ticket prices of $4.50 during weekday afternoon matinee hours and $8.50 during evening and weekend hours. Economists explain the ticket price difference by the fact that the demand for movie tickets during the weekday afternoon matinee hours is ________, but during the evening and weekend hours it is ________.

more elastic, more inelastic

It is ________ for a corn producer in a perfectly competitive corn industry to make excess profits because entry into the corn industry is free.

most likley

A consumer satisfies the condition ________ when her indifference curve is just tangent to her budget constraint.

mux/px = muy/py

refer to Figure 9.4. In the short run this firm should ________ and in the long run this firm should ________, if economic conditions do not change.

shut down, exit industry

Refer to the information provided in Figure 9.4 below to answer the question(s) that follow. Figure 9.4 Refer to Figure 9.4. In the short run this firm should ________ and in the long run this firm should ________, if economic conditions do not change.

shut down; exit the industry

If a firm's total costs are $80 when 10 units of output are produced and $90 when 11 units of output are produced, the marginal cost of the 11th unit is

$10

A dairy company, Farley Farm, has total costs of $10,000 and total variable costs of $3,000. Farley Farm's total fixed costs are

$7,000

Refer to the information provided in Figure 6.5 below to answer the question(s) that follow. Figure 6.5 Refer to Figure 6.5. Molly's budget constraint is BD. Molly's income is $400, the price of a DVD is $15 and the price of a CD is $20. At point B the consumer is buying ________ DVDs and ________ CDs.

0, 20

Refer to the information provided in Figure 6.5 below to answer the question(s) that follow. Figure 6.5 Refer to Figure 6.5. Molly's budget constraint is CD. Molly's income is $200, the price of a DVD is $7.50 and the price of a CD is $10. At point C, she is buying ________ DVDs and ________ CDs.

0, 20

SCENARIO 9.3: Investors put up $520,000 to construct a building and purchase all equipment for a new restaurant. The investors expect to earn a minimum return of 10 per cent on their investment. The restaurant is open 52 weeks per year and serves 900 meals per week. The fixed costs are spread over the 52 weeks (i.e. prorated weekly). Included in the fixed costs is the 10% return to the investors and $1,000 per week in other fixed costs. Variable costs include $1,000 in weekly wages and $600 per week for materials, electricity, etc. The restaurant charges $5 on average per meal. Refer to Scenario 9.3. The normal return to the investors on a weekly basis is

1,000

SCENARIO 9.1: Amy borrowed $20,000 from her parents to open a bagel shop. She pays her parents a 5% yearly return on the money they lent her. Her other yearly fixed costs equal $9,000. Her variable costs equal $30,000. In her first year, Amy sold 40,000 dozen at a price of $1.50 per dozen. Refer to Scenario 9.1. Amy's total fixed costs equal

10,000

Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow. Figure 8.5 Refer to Figure 8.5. If seven drones are produced, total variable costs are

100

Labor is the only variable input for Elliot's dog-walking service. His labor costs are $300 a day and his service walks 25 dogs per day. His labor costs increase to $315.50 a day to walk 26 dogs per day. The marginal cost of walking that 26th dog is

15.50

Refer to Scenario 9.7 below to answer the question(s) that follow. SCENARIO 9.7: Julio borrowed $80,000 from his great aunt to open a coffee stand at a local flea market. He agrees to pay his great aunt a 5% yearly return on the money she lent him. His other yearly fixed costs equal $16,000. His variable costs equal $60,000. He sold 50,000 cups of coffee during the year at a price of $3.00 per cup. Refer to Scenario 9.7. Julio's total revenue is

150,000

Sonia has $2,400 a month to spend on clothing and food. The price of clothing is $60 and the price of food is $10. The clothing and food pairs in Sonia's choice set include ________ units of clothing and ________ units of food.

20, 120

Refer to Figure 6.2. Assume Mr. Lingle is on budget constraint AC. If the price of a gardenburger is $5, Mr. Lingle's monthly income is

200

Refer to Scenario 9.8 below to answer the question(s) that follow. SCENARIO 9.8: Investors put up $1,040,000 to construct a building and purchase all equipment for a new gourmet cupcake bakery. The investors expect to earn a minimum return of 10 per cent on their investment. The bakery is open 52 weeks per year and sells 900 cupcakes per week. The fixed costs are spread over the 52 weeks (i.e. prorated weekly). Included in the fixed costs is the 10% return to the investors and $2,000 in other fixed costs. Variable costs include $2,000 in weekly wages, and $600 per week in materials, electricity, etc. The bakery charges $8 on average per cupcake. Refer to Scenario 9.8. The normal return to the investors on a weekly basis is

2000

Refer to Scenario 9.9 below to answer the question(s) that follow. SCENARIO 9.9: Sponsors invest $250,000 in a new greeting card business on the promise that they will earn a return of 10% per year on their investment. The business sells 52,000 greeting cards per year. The fixed costs for the business include the return to investors and $79,000 in other fixed costs. Variable costs consist of wages ($1,000 per week) plus materials, electricity, etc. ($3,000 per week). The business is open 52 weeks per year. Refer to Scenario 9.9. The annual total costs for the business sum to ________.

312,000

Refer to Table 8.4. Assuming the price of capital (K) is $10 per unit and the price of labor (L) is $5 per unit, the lowest long-run total cost of producing one unit of output is

50

Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow. Figure 8.5 Refer to Figure 8.5. If one drone is produced, average fixed costs are

50

The Oh So Humble Bakery sells 300 muffins at a price of $1 per muffin. Its explicit costs for producing 300 muffins are $250. If the bakery is earning a normal rate of return, then implicit costs must be

50

CENARIO 7.4: You own and are the only employee of a company that sells custom embroidered pet sweaters. Last year your total revenue was $120,000. Your costs for equipment, rent, and supplies were $30,000. To start this business you invested an amount of your own capital that could pay you a $50,000 a year return. Refer to Scenario 7.4. A yearly normal return for your company would be

50K

Assume the total product of two workers is 160 and the total product of three workers is 180. The three worker's average product is ________ while the third worker's marginal product is ________.

60, 20

Refer to Figure 8.4. If twelve microwave ovens are produced, Micro Oven's total costs are

800

Refer to Figure 9.1. The profit-maximizing price of wheat is ________ per bushel.

9

Refer to the information provided in Figure 9.1 below to answer the question(s) that follow. Figure 9.1 Refer to Figure 9.1. If this farmer maximizes profits, his average variable cost will be

9

refer to Figure 8.4. If twelve microwave ovens are produced, Micro Oven's average total costs are

? not 25

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow. Figure 6.2 Refer to Figure 6.2. Assume Mr. Lingle's budget is AC. At which point does Mr. Lingle spend exactly his income?

A

Refer to Figure 6.4. Billʹs budget constraint is AC. If the black bean price increases, Billʹs budget constraint will be

AB

Refer to the information provided in Figure 6.5 below to answer the question(s) that follow. Figure 6.5 Refer to Figure 6.5. Molly's budget constraint is BD. If the price of CDs decreases, her new budget constraint becomes

CD

Refer to the information provided in Figure 6.1 below to answer the question(s) that follow. Figure 6.1 Refer to Figure 6.1. Assume Tom's budget constraint is AC. He will have leftover income if he purchases the bundle represented by point

E

________ are likely a fixed cost of a firm.

Lease payments for office space business costs, such as rent, that are constant whatever the quantity of goods or services produced.

If a firm's demand curve is perfectly elastic, then at the profit-maximizing level of output

P=MR=MC

Billy Bob's Fertilizer Engineers, a perfectly competitive firm, is incurring a loss, but the price is still above minimum average variable cost. Then in the short run this firm should ________, and in the long run, if there is no change in economic conditions, this firm should ________.

Produce where MR = MC; exit the industry

Related to the Economics in Practice on p. 125: Suppose Store ABC runs an ad claiming to have "low prices every day." They even demonstrate that the total expenditure for a basket of groceries is less at their store than at any of their competitors. Which of the following statements is not true?

You would clearly be better off shopping at Store ABC.

Refer to the information provided in Figure 6.13 below to answer the question(s) that follow. Figure 6.13 Refer to Figure 6.13. Assume Megan has two products available, pizza and hamburgers. Megan must be compensated with more pizzas as she gives up more hamburgers. The curve in Panel ________ represents her indifference curve.

b

Refer to the information provided in Figure 6.4 below to answer the question(s) that follow. Figure 6.4 Refer to Figure 6.4. Bill's budget constraint is AC. His budget constraint would shift to AB if the price of

black beans increased

Refer to the information provided in Figure 7.6 below to answer the question(s) that follow. Figure 7.6 Refer to Figure 7.6. If this shoe manufacturer increases labor from 20 to 25 (moving along the given isoquant with Q = 50), the marginal product of the 25th worker

cannot be determined because output remains constant

A price change would have the largest income effect on a

car

The owner of Tie-Dyed T-shirts, a perfectly competitive firm, hires you to give him economic advice. He tells you that the market price for his shirts is $15 and that he is currently producing 200 shirts at an AVC of $10 and an ATC of $20. What would you recommend that he do?

continue producing in the short run, as his loss from production is less than his fixed costs, but to exit the industry in the long run if there are no changes in economic conditions.

The All Smiles Greeting Card Company wants to increase the quantity of greeting cards it sells by 20%. If the price elasticity of demand is -5.0, the company must

decrease price by 4%

Corn is produced in a perfectly competitive market. The demand for ethanol decreases. This will cause the individual corn farmer's marginal revenue to ________ and their profit-maximizing level of output to ________.

decrease, decrease

Refer to the information provided in Figure 6.6 below to answer the question(s) that follow. Figure 6.6 Refer to Figure 6.6. Bill's budget constraint was originally EF. If his new budget constraint is AD, then his income

decreased and the price of bell peppers increased.

When an increase in the scale of production leads to higher average costs, the industry exhibits

decreasing returns to scale, or diseconomies of scale

Suppose Fergie's Florist experiences ________ up to a certain point and ________ beyond that point. Its long-run average cost curve is most likely to be U-shaped.

economies of scale, diseconomies of scale

In the short run, a firm using variable labor and fixed capital inputs achieves the ________ level of output at the minimum point on its average total cost curve.

efficient

Refer to Figure 8.8. If the market price of soybeans ________, then to maximize profits this farmer should produce 700 bushels of soybeans.

falls to $8

Refer to the data provided in Table 9.3 below to answer the following question(s). Table 9.3 q TFC TVC TC MC AVC ATC 0 $100 $0 $100 -- -- -- 1 100 40 140 40 40 140 2 100 60 160 20 30 80 3 100 90 190 30 30 63.33 4 100 124 224 34 31 56 5 100 180 280 56 36 56 6 100 264 364 84 44 60.67 7 100 372 472 108 53.14 67.43 Refer to Table 9.3. If the market price is $34, then in the long run the firm will

go out of biz

The cross-price elasticity of demand between good X and good Y is 0.5. Given this information, which of the following statements is true?

good X and Y are substitutes

A ________ line is a perfectly price elastic demand curve.

horizontal

Wheat is produced in a perfectly competitive market. Market demand for wheat increases. This will cause the individual wheat farmer's marginal revenue to ________ and their profit-maximizing level of output to ________.

increase, increase

in the short run marginal cost is positive and decreasing at output levels where total variable cost is ________ at a(n) ________ rate.

increasing, decreasing

If a decrease in income results in a decrease in the quantity demanded for a product, the product is ________, and the value of the income elasticity of demand is ________.

inferior, neg

At a price of $40, a store can sell 35 toasters a day. At a price of $35 the store can sell 39 toasters a day. Since total revenue ________ by the price decrease, demand must be ________.

is decreased; inelastic

Refer to the information provided in Figure 8.3 below to answer the question(s) that follow. Figure 8.3 Refer to Figure 8.3. If total fixed costs are $100, then average total cost of producing 10 basketballs is

less than 8?

Refer to Figure 8.10. Panel ________ represents the industry demand curve for the perfectly competitive wheat industry.

linear going down letter down

Refer to Figure 9.6. Assume this firm is in a constant-cost industry. For this firm to ________, the firm must be producing q3 units of output.

long-run equilibrium,

The short-run supply curve of a competitive firm is the portion of

marginal cost curve that lies above average variable cost

Refer to Figure 5.5. As the price of good W decreased, the demand for good Y shifted from D1 to D2. The cross-price elasticity of demand between W and Y is

negative

Refer to Figure 9.2. If MR = $9, then in the long run

none of these are correct ????

If an increase in income results in an increase in the quantity demanded for a product, the product is ________, and the value of the income elasticity of demand is ________.

normal good, positive

Related to the Economics in Practice on page 172: When there are a few unsold seats in an arena for a rock concert, the marginal cost of filling those seats

not primarily depend

A firm facing a ________ demand curve, ceteris paribus, will have zero quantity demanded if it raises its price above the market price.

perf inelastic

A firm earns a profit if

to maximize profit, a firm produces the quantity of output (Q) where MR = MC, given that MC increases as output increases TR - TC, and MR = MC

If revenue is less than ________, profit is ________.

total costs,

When the price of cheddar cheese increases 15%, quantity demanded decreases 15%. The price elasticity of demand for cheddar cheese is ________ and total revenue from cheddar cheese sales will ________.

unit elastic; not change

Assume Gloria is initially in equilibrium and that X and Y are normal goods for her. Then the price of X falls. For Gloria to move to a new equilibrium point her consumption of

x must increase

Refer to Figure 7.1. A corn producer's profit is $200 and is producing 100 bushels of corn. Then he must have a cost per bushel of

3

SCENARIO 7.5: You own and are the only employee of a company that customizes bicycles. Last year your total revenue was $60,000. Your costs for rent and supplies were $25,000. To start this business you invested an amount of your own capital that could pay you a $45,000 a year return. Refer to Scenario 7.5. A yearly normal return for your company is

45,000

The ________ that a firm takes in when it increases output by one additional unit is marginal revenue.

added revenue

Firms in an economy with high labor costs have an incentive to use more ________ techniques.

capital intensive

If there is a decrease in industry supply while the industry demand curve remains the same, then an individual firm in a perfectly competitive industry currently earning losses will see its losses

decrease

If there is an increase in industry supply while the industry demand curve remains the same, then an individual firm in a perfectly competitive industry currently earning positive profits will see its profits

decrease

Refer to Scenario 9.3 below to answer the question(s) that follow. SCENARIO 9.3: Investors put up $520,000 to construct a building and purchase all equipment for a new restaurant. The investors expect to earn a minimum return of 10 per cent on their investment. The restaurant is open 52 weeks per year and serves 900 meals per week. The fixed costs are spread over the 52 weeks (i.e. prorated weekly). Included in the fixed costs is the 10% return to the investors and $1,000 per week in other fixed costs. Variable costs include $1,000 in weekly wages and $600 per week for materials, electricity, etc. The restaurant charges $5 on average per meal. Refer to Scenario 9.3. The restaurant is making ________ economic profits per week.

positive

Refer to Table 8.4. Assuming the price of capital (K) is $10 per unit and the price of labor (L) is $5 per unit, what production technique should this firm use to produce 2 units of output?

production technique B++

Refer to Figure 8.9. This farmer's ________ level of output is 500 units of output.

profit-maximizing

Twenty‐five students in a class take a test for which the average grade is 75. Then a twenty‐sixth student enters the class, takes the test, and scores 80. The test average calculated with 26 students will

rise above 75

If a firm in a perfectly competitive industry raises its price above market price,

sales will drop to zero

The owner of Tie-Dyed T-shirts, a perfectly competitive firm, has hired you to give him some economic advice. He has told you that the market price for his shirts is $20 and that he is currently producing 200 shirts at an AVC of $15 and an ATC of $25. What would you recommend to him?

same answer as other tie dye

Perfectly competitive firms

sell homogenous product are price takers are small relative to the size of the market all of the above!!!!!

Assume that the relative prices of capital and labor have not changed. As a firm's expenditures for capital and labor increase, its isocost line

shifts out // to original isocost line

If TR < TVC, a firm would ________ in the short run and ________ in the long run.

shut down, exit industry

Refer to Table 8.3. From the information in the given table,

the firm eventually experiences diminishing returns to its variable input