TTU ECON 2305 EXAM 2

Output (balloons per hour)/Total Cost (dollars per hour) 0/$4.00 1/$7.00 2/$8.00 3/$12.50 4/$17.20 5/$22.00 6/$29.00 In the above table, the average fixed cost at 4 units of output is

$1.00

Quantity sold/Price 5/$15 6/$15 7/$15 In the above table, if the quantity sold by the firm rises from 5 to 6, its marginal revenue is

$15

An example of a variable factor of production in the short run is

an employee

In the figure above, curve A is the ________ curve

marginal cost

A perfectly competitive firm's economic profit is maximized by producing the amount of output such that

marginal revenue equals marginal cost

In a perfectly competitive market, which of the following determines the market price?

market demand and market supply

In the United States, resources are most often allocated by

market price

In the long run, a firm has

no factors of production that are fixed

In the short run, a firm will

produce and incur an economic loss if its total revenue covers its total variable cost but not its total cost

A period of time in which the quantity of at least one factor of production used by a firm is fixed is called the

short run

In the short run a perfectly competitive firm will

shut down if P < AVC

After constructing a new factory, the cost of building the factory is a

sunk cost

Marginal cost is equal to

the change in total cost divided by the change in output

A market is perfectly competitive if

there are many firms in it, each selling an identical product

Total economic profit is

total revenue minus total opportunity cost

In the above figure, if the price is $2, then the total consumer surplus is

triangle abc

A firm's total cost (TC) equals the sum of its fixed cost plus its

variable cost

The marginal revenue curve for a perfectly competitive firm is

a horizontal line

A market demand curve is constructed by

a horizontal summation of each individual demand curve

Output (pies)/Total variable cost (dollars)/Total cost (dollars) 0/0/300 100/400/- 200/1,000/- 300/1,800/- 400/2,800/- The above table gives some of the costs of the Delicious Pie Company. The marginal cost of increasing pie output from 200 to 300 pies equals ________ per pie

$8

Labor (workers)/Output (bikes)/Total fixed costs (dollars)/Total variable cost (dollars)/Total cost (dollars) 0/0/200/-/- 1/20/-/100/- 2/50/-/-/- 3/60/-/-/- 4/64/-/-/- The table above gives costs at Jan's Bike Shop. Unfortunately, Jan's record keeping has been spotty. Each worker is paid $100 a day. Labor costs are the only variable costs of production. What is the total variable cost of producing 60 bikes?

$300

The figure illustrates the market for hot dogs on Big Foot Island. The producer surplus is ________

$60 an hour

At point d in the above figure, the average product of labor equals

3.75

Labor (workers)/Total product (pizzas produced per hour) 0/0 1/5 2/9 3/12 4/14 5/15 Using the data in the above table, what is the marginal product of the second worker?

4 pizzas per hour

The marginal cost (MC) curve intersects the

ATC and AVC curves at their minimum points

A perfectly competitive firm is making an economic profit when

Both answers A and B are correct A)the price is greater than the minimum of its average total cost B) its total revenue is greater than its total cost

A price ________ is a regulated ________ that must be set below the equilibrium price to have an effect

ceiling; price

In a perfectly competitive market, if a firm finds it is producing an amount of output such that its marginal cost exceeds its price, it will

decrease its output to increase its profit

The costs incurred even when no output is produced are called

fixed costs

Imposing a minimum wage that is above the equilibrium wage rate results in

higher job search costs