Econ final

Wanda 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 Wanda's explicit costs per glass?

$0.08

Wanda 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 Wanda's implicit costs per glass?

$0.10

Wanda 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 Wanda's total economic costs per glass?

$0.18

The following table represents the costs of five possible sellers. Seller Cost ($) Quentin- 10 Ruby-30 Sandra-60 Thomas-100 Ursula-150 If each producer has one unit available for sale, and if the market equilibrium price is $80 per unit, how much is the total producer surplus in this market? if its Consumer surplus, you go from bottom to top (willingness to pay) (might use this same question with different wording and might do consumer surplus instead of producer surplus)

$140

Suppose a firm in a competitive market produces and sells 8 units of output and has a marginal revenue of $8. What would be the firm's total revenue if it instead produced and sold 4 units of output?

$32 Since it is a competitive market the MR has a constant MC of 8 so TR = P x Q which would be 8 x 4 which is $32

Allen tutors in his spare time for extra income. Buyers of his service are willing to pay $40 per hour for as many hours Allen is willing to tutor. On a particular day, he is willing to tutor the first hour for $10, the second hour for $18, the third hour for $28, and the fourth hour for $40. Assume Allen is rational in deciding how many hours to tutor. His producer surplus is?

$64

Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book?

$8

Wanda 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 Wanda's total economic profits?

$96

Refer to Figure 24 What area measures the monopolist's profit?

(K-B)*W

Figure from notes When the market price is P7, a profit-maximizing firm's short-run profits can be represented by the area

(P7 - P5) × Q3.

If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3, then the marginal revenue of selling the eighth unit is equal to

-$4

Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L = 12, Q = 122) and (L = 13, Q = 130). Then the marginal product of the 13th worker is

8 units of output.

When firms are neither entering nor exiting a perfectly competitive market, total revenue must equal total cost for each firm. economic profits must be zero. price must equal the minimum of marginal cost for each firm. Both a and b are correct.

Both a and b are correct.

Which of the following is a characteristic of a competitive market?

Buyers and sellers are price takers.

Total Surplus

CS+PS

Consumer surplus

Is the amount a buyer is willing to pay minus the amount the buyer actually pays

Refer to Figure 24. What price will the monopolist charge?

K

Profit

Total Revenue - Total Cost

Accounting Profit

Total revenue - total explicit costs

Refer to Figure 24 . How much output will the monopolist produce?

W

On a graph, the area below a demand curve and above the price measures

consumer surplus

The socially efficient level of production occurs where the marginal cost curve intersects

demand

If Farmer Brown 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 Brown's production function exhibits

diminishing marginal product.

Marginal Cost

dividing the change in costs by the change in quantity.

When the supply of a good increases and the demand for the good remains unchanged, consumer surplus

increases

Refer to Figure 6. In the short run, if the market price is higher than P1 but less than P4, individual firms in a competitive industry will earn

losses but will remain in business.

Total Revenue

multiply the number of units sold by the consumer price of each item

In the short run for a particular market, there are 300 firms. Each firm has a marginal cost of $30 when it produces 200 units of output. One point on the market supply curve is

quantity = 60,000; price = $30. 300 * 200 for market quantity and price is $30

A competitive market is in long-run equilibrium. If demand increases, then the price will

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

Mrs. Smith operates a business in a competitive market. The current market price is $8.10. At her profit-maximizing level of production, the average variable cost is $8.00, and the average total cost is $8.25. Mrs. Smith should

shut down her business in the short run but continue to operate in the long run.

Producer Surplus

the amount a seller is paid for a good minus the sellers cost

If the current allocation of resources in the market for hammers is inefficient, then it must be the case that

the sum of consumer surplus and producer surplus could be increased by moving to a different allocation of resources.

An example of an opportunity cost that is also an implicit cost is

the value of the business owner's time.

Economic Profit

total revenue minus total costs (including explicit and implicit costs)

A sunk cost is one that

was paid in the past and will not change regardless of the present decision.

Economies of scale arise when

workers are able to specialize in a particular task.