ECON 2000 FINAL = MATH Graphs/Word Problems

b. 14 units of output.

47 - Suppose a certain firm is able to produce 168 units of output per day when 15 workers are hired. The firm is able to produce 182 units of output per day when 16 workers are hired, holding other inputs fixed. The marginal product of the 16th worker is: a. 11 units of output. b. 14 units of output. c. 181 units of output. d. 10 units of output.

B. 6 units

A firm in a competitive market has the following costume structure: If the market price is $8, how many units of output should the firm produce to maximize profit? A. 5 units B. 6 units C. 8 units D. 7 units

B. 4 units

A monopolist faces the following demand curve: If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to maximize profit? A. 5 units B. 4 units C. 3 units D. 2 units

c. $15,000

An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc. How much additional profit can the airline earn by charging each customer their willingness to pay relative to charging a flat price of $600 per ticket? a. $40,000 b. $70,000 c. $15,000 d. $25,000

b. 2.20

At a price of $1.00, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of $1.20, the coffee shop would be willing to supply 150 cinnamon rolls per day. Using the midpoint method, the price elasticity of supply is about... a. 1.11 b. 2.20 c. 0.45 d. 0.90

a. surplus of 8 units.

At a price of $24, there is a: a. surplus of 8 units. b. surplus of 4 units. c. shortage of 4 units. d. shortage of 8 units.

a. $1,000

Brady Industries has average variable costs of $1 and average total costs of $3 when it produces 500 units of output. The firm's total fixed costs equal... a. $1,000 b. $2,000 c. $2 d. $4

d. $1.85.

Carly sharpens knives in her spare time for extra income. Buyers of her service are willing to pay $2.95 per knife for as many knives as Carly is willing to sharpen. On a particular day, she is willing to sharpen the first knife for $2.00, the second knife for $2.25, the third knife for $2.75, and the fourth knife for $3.50. Assume Carly is rational in deciding how many knives to sharpen. Her producer surplus is... a. $1.30. b. $0.95. c. $1.15. d. $1.85.

c. less than $220

Gretchen is a writer who works from her home. Gretchen lives next door to Randall, the trumpet player for a local band. Randall needs lots of practice to earn his share of the band's profit, which will amount to $350. Gretchen gets distracted by Randall's trumpet playing but she needs to get her writing done to earn $570 for her current article. If Randall owns the right to play his music and Gretchen needs to hire a lawyer to help her reach an agreement with Randall, then what price is Gretchen willing to pay the lawyer? a. less than $920 b. less than $350 c. less than $220 d. less than $570

a. 20 percent decrease in the quantity demanded.

If the price elasticity of demand for a good is 2.0, then a 10 percent increase in price results in a... a. 20 percent decrease in the quantity demanded. b. 40 percent decrease in the quantity demanded. c. 5 percent decrease in the quantity demanded. d. 0.2 percent decrease in the quantity demanded.

d. marginal tax rate is 25 percent.

If your income is $50,000, your income tax liability is $10,000, and you paid $0.25 in taxes on the last dollar you earned, your... a. marginal tax rate is 20 percent. b. average tax rate is 5 percent. c. average tax rate is 25 percent. d. marginal tax rate is 25 percent.

b. $50.00.

Refer to Figure 16-5. When the firm is maximizing its profit, the markup over margin: a. $66.66. b. $50.00. c. $33.33. d. $16.67.

c. supply of 300 units, and price would fall.

Refer to Figure 4-20. If the price is $25, then there would be an excess: a. demand of 100 units, and price would fall. b. supply of 100 units, and price would fall. c. supply of 300 units, and price would fall. d. demand of 300 units, and price would fall.

b. $1,250.

Refer to Figure 5-3. At a price of $50 per unit, sellers' total revenue equals: a. $900. b. $1,250. c. $1,400. d. $1,020.

b. $50

Refer to Figure 5-3. The maximum value of total revenue corresponds to a price of: a. $20 b. $50 c. $100 d. $70

a. 0.66.

Refer to Figure 5-5. Using the midpoint method, between prices of $30 and $50, price elasticity of demand is about... a. 0.66. b. 0.4. c. 1.5. d. 3.

b. $2,500

Refer to Figure 7-5. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus to existing producers? a. $625 b. $2,500 c. $3,125 d. $5,625

c. $7.50.

Refer to Figure above. Suppose that a $3 per-unit tax is placed on this good. What is the amount of deadweight loss resulting from this tax? a. $45.00. b. $22.50. c. $7.50. d. $15.00.

b. give riding lessons to fewer than 20 children per month.

Robin owns a horse stable and riding academy and gives riding lessons for children at "pony camp." His business operates in a competitive industry. Robin gives riding lessons to 20 children per month. His monthly total revenue is $4,000. The marginal cost of pony camp is $250 per child. In order to maximize profits, Robin should: a. We do not have enough information to answer the question. b. give riding lessons to fewer than 20 children per month. c. give riding lessons to more than 20 children per month. d. continue to give riding lessons to 20 children per month.

a. required to pay a tax of $0.45 per gallon of gasoline sold.

Scenario 10-1 The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 1,000th gallon of gasoline entails the following: - A private cost of $3.10; - A social cost of $3.55; - A value to consumers of $3.70. Refer to Scenario 10-1. Suppose the dollar amount of the externality, per gallon of gasoline, is constant, regardless of how much gasoline is produced. Then the externality could be internalized if producers of gasoline were: a. required to pay a tax of $0.45 per gallon of gasoline sold. b. provided a subsidy of $0.45 per gallon of gasoline sold. c. required to pay a tax of $0.30 per gallon of gasoline sold. d. provided a subsidy of $0.30 per gallon of gasoline sold.

a. 1,000 < QOPTIMUM< QMARKET

Scenario 10-1 The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 1,000th gallon of gasoline entails the following: - A private cost of $3.10; - A social cost of $3.55; - A value to customers of $3.70. Refer to Scenario 10-1. Let QMARKET represent the equilibrium quantity of gasoline, and let QOPTIMUM represent the socially optimal quantity of gasoline. Which of the following inequalities is correct? a. 1,000 < QOPTIMUM< QMARKET b. QMARKET< 1,000 < QOPTIMUM c. QOPTIMUM< QMARKET< 1,000 d. QOPTIMUM< 1,000 < QMARKET

b. decrease its output but continue to produce.

Scenario 14-1 Assume a certain firm in a competitive market is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit. Refer to Scenario 14-1. To maximize its profit, the firm should... a. continue to produce 1,000 units. b. decrease its output but continue to produce. c. increase its output. d. shut down.

c. $10 and 100 units.

Suppose a firm in a competitive market earned $1,000 in total revenue and had a marginal revenue of $10 for the last unit produced and sold. What is the average revenue per unit, and how many units were sold? a. $5 and 100 units. b. $5 and 50 units. c. $10 and 100 units. d. $10 and 50 units.

d. $50

Suppose a firm operating in a competitive market has the following cost curves: Refer to Figure 14-2. If the market price is $10, what is the firm's total revenue? a. $30 b. $15 c. $35 d. $50

b. $250

Suppose a tax of $5 per unit is imposed on video game systems, and the tax causes the equilibrium quantity of gaming systems to decrease from 200 units to 100 units. The tax decreases consumer surplus by $450 and decreases producer surplus by $300. The deadweight loss from the tax is... a. $500 b. $250 c. $1,000 d. $750

a. Less than $6.

Suppose that a firm in a competitive market has the following cost curves: Refer to Figure 14-1. The firm should shut down in the short run if the market price is... a. Less than $6. b. Above $13. c. Above $6 but less than $13. d. Above $6 but less than $18.

d. $13.

Suppose that a firm in a competitive market has the following cost curves: Refer to Figure 14-1. The firm will earn zero economic profit when the price is: a. $10. b. $6. c. $4. d. $13.

d. (i), (ii), and (iii)

Suppose that a firm operating in a perfectly competitive market sells 300 units of output at a price of $3 each. Which of the following statements is correct? (i) Marginal revenue equals $3. (ii) Average revenue equals $3. (iii) Total revenue equals $900. a. (i) and (ii) b. only (i) c. (iii) only d. (i), (ii), and (iii)

a. $35

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that the average total cost when 5 units of output are produced is $30, and the marginal cost of the sixth unit of output is $60. What is the average total cost when six units are produced? a. $35 b. $10 c. $30 d. $25

d. 401

The Occupational Safety and Health Administration (OSHA) has determined that the probability of a worker dying from exposure to a hazardous chemical used in the production of fertilizer is 0.008. The cost of imposing a regulation that would ban the chemical is $32 million. If the value of a human life is equal to $10 million, how many people must the policy affect in order for the benefits to exceed the costs? a. 4001 b. 3201 c. 256 d. 401

b. $10.

The dashed vertical line between points A and B shows the amount of a tax in the market. The effective price that sellers receive after the tax is imposed is... a. $16. b. $10. c. $6. d. $24.

c. $0.

The figure is drawn for a monopolistically competitive firm. Refer to Figure 16-5. The firm's maximum profit is... a. -$5,000.00. b. $5,000.00. c. $0. d. $8,887.78.

c. $80, and this figure represents the surplus that is lost because the tax discourages mutually advantageous trades between buyers and sellers.

The vertical distance between points A and B represents a tax in the market. Refer to Figure 8-3. The deadweight loss associated with this tax amounts to... a. $80, and this figure represents the amount by which tax revenue to the government exceeds the combined loss of producer and consumer surpluses. b. $60, and this figure represents the amount by which tax revenue to the government exceeds the combined loss of producer and consumer surpluses. c. $80, and this figure represents the surplus that is lost because the tax discourages mutually advantageous trades between buyers and sellers. d. $60, and this figure represents the surplus that is lost because the tax discourages mutually advantageous trades between buyers and sellers.

a. $80

This figure depicts a situation in a monopolistically competitive market. Refer to Figure 16-2.What price will the monopolistically competitive firm charge in this market? a. $80 b. $60 c. $75 d. $70

C. 2.8

Using the midpoint method, if the price falls from $200 to $150, the absolute value of the price elasticity of demand is... A. 5.3 B. 0.8 C. 2.8 D. 0.36