Econ

If the market price is $4, this firm will

produce 3 units in the short run and exit in the long run

A firm operating in a monopolistically competitive market can earn economic profits in

the short run but not in the long run.

Erika owns a lemonade stand. She produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. Her costs per glass are as follows: $0.01 for water, $0.02 for sugar, $0.03 for lemons, $0.02 for cups, and $0.10 for the opportunity cost of her labor. She can sell 300 glasses for $0.50 each. What are Erika's total economic costs per glass?

$0.18

What is the value of C?

$100

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?

$15,000

Only two firms, Acme and Ultima, sell a particular product. The table below shows the demand curve for their product. Each firm has the same constant marginal cost of $8 and zero fixed cost. Acme and Ultima agree to jointly maximize profits, and split the profit maximizing production and profits evenly. If Acme and Ultima each break the agreement and each produce 5 more than agreed upon, how much less profit does each make, compared to the profit at to the cartel output?

$20

Refer to Figure above. Given that MuffinHaus chooses the profit maximizing price and quantity, what profit level will it obtain?

$280

Gwen has decided to start her own photography studio. To purchase the necessary equipment, Gwen withdrew $2,000 from her savings account, which was earning 3% interest, and borrowed an additional $4,000 from the bank at an interest rate of 7%. What is Gwen's annual opportunity cost of the financial capital that has been invested in the business?

$340

Joe is a shrimp fisherman who used $2,000 from his personal savings account to buy a boat and equipment for his shrimp business. The savings account paid 2% interest. What is Joe's annual opportunity cost of the financial capital that he invested in his business?

$40

A firm's marginal cost has a minimum value of $4, its average variable cost has a minimum value of $6, and its average total cost has a minimum value of $7. Then the firm will shut down in the short run once the price of its product falls below

$6

Allowing an inventor to have the exclusive rights to market her new invention will lead to (i) a product that is priced higher than it would be without the exclusive rights. (ii) desirable behavior in the sense that inventors are encouraged to invent. (iii) higher profits for the inventor.

(i), (ii), and (iii)

Suppose that a firm operating in perfectly competitive market sells 100 units of output. Its total revenues from the sale are $500. Which of the following statements is correct? (i) Marginal revenue equals $5. (ii) Average revenue equals $5. (iii) Price equals $5.

(i), (ii), and (iii)

What is the marginal revenue from the sale of the 4th unit?

-$3

Refer to Table above. If a monopolist faces a constant marginal cost of $10, how much output should the firm produce in order to maximize profit?

3 units

A seller in a competitive market

All of the above are correct.

For a large firm that produces and sells automobiles, which of the following costs would be a variable cost?

All of the above are correct.

Which of the following is not an example of a barrier to entry?

An entrepreneur opens a popular new restaurant.

Which of the following is not an example of price discrimination?

An ice cream parlor charges a higher price for ice cream than for sherbet.

The efficient scale of production occurs at which quantity?

C

Which area represents the deadweight loss from monopoly?

G

The FTC's main case against Google in its 2020 anti-trust action is based primarily on the claim that,

Google ties its web search engine to other products, such as Android OS

Which of the following statements is correct?

If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit.

How does a competitive market compare to a monopoly that engages in perfect price discrimination?

In both cases, total social welfare is the same.

Refer to Figure above. If the price is $6 in the short run, what will happen in the long run?

Individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry.

Refer to Figure above. What price will the monopolist charge?

K

Refer to Figure 16-11. The graph depicts a monopolistically competitive firm in the short run. Which of the following explanations best describes the long run adjustment?

More firms will enter this market and each firm will have a smaller share of the total market demand, shifting this firm's demand curve to the left.

Refer to Figure above. How much output will the monopolist produce?

W

Which of the following firms is the closest to being a perfectly competitive firm?

a hot dog vendor in New York

A monopoly market is characterized by

barriers to entry.

Figure 17-2. Two companies, Acme and Pinnacle, each decide whether to produce a good quality product or a poor quality product. In the figure, the dollar amounts are payoffs and they represent annual profits for the two companies. Refer to Figure 17-2. If this game is played only once, then the most likely outcome is that

both firms produce a good quality product.

As a group, oligopolists would always earn the highest profit if they would

charge the same price that a monopolist would charge if the market were a monopoly.

Land of Many Lakes (LML) sells butter to a broker in Albert Lea, Minnesota. Because the market for butter is generally considered to be competitive, LML does not

choose the price at which it sells its butter.

Suppose that some firms in a competitive industry are earning zero economic profits, while others are experiencing losses. All else equal, in the long run, we would expect the number of firms in the industry to

decrease

If Farmer Green plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 5 bushels of wheat. If he plants 2 bags, he gets 9 bushels. If he plants 3 bags, he gets 12 bushels. A bag of seeds costs $120, and seeds are his only cost. Farmer Green's production function exhibits

diminishing marginal product.

In the long run a company that produces and sells candy bars incurs total costs of $1,200 when output is 2,400 candy bars and $1,400 when output is 2,900 candy bars. The candy bar company exhibits

economies of scale because average total cost is falling as output rises.

Refer to Figure above. If the market starts in equilibrium at point Z in panel (b), a decrease in demand will ultimately lead to

fewer firms in the market.

A monopolist produces

less than the socially efficient quantity of output but at a higher price than in a competitive market.

A market structure in which there are many firms selling products that are similar but not identical is known as

monopolistic competition.

For a firm, the production function represents the relationship between

quantity of inputs and quantity of output.

A competitive market is in long-run equilibrium. If demand increases, we can be certain that price will

rise in the short run. Some firms will enter the industry. Price will then fall to reach the new long-run equilibrium.