EXAM EXAM MICRO

During the summer months, what is Amari's opportunity cost of taking an hour off work to go enjoy some leisure time? a. $13 b. Between $13 and $18 c. $18 d. Less than $13

a. $13

Taylor sells 400 candy bars at $0.50 each. Her total costs are $125. Her profits are a. $75.00. b. $124.50. c. $125.00. d. $200.00

a. $75.00

Use the letters in the figure to identify the profit area if this firm were able to perfectly price discriminate

ACG

What price should Peter charge to maximize his profits?

$4.40

Suppose a profit-maximizing monopolist faces a constant marginal cost of $20, produces an output level of 100 units, and charges a price of $50. The socially efficient level of output is 200 units. Assume that the demand curve and marginal revenue curve are the typical downward-sloping straight lines. The monopoly deadweight loss equals $1,500

1500

Use the letters in the figure to identify the area of deadweight loss for the single price monopolist

EFG

On a 250-acre farm, a farmer is able to produce 4,500 bushels of wheat when he hires 2 workers. He is able to produce6,300 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product? a. The farmer is able to produce 7,560 bushels of wheat when he hires 4 workers. b. The farmer is able to produce 8,100 bushels of wheat when he hires 4 workers. c. The farmer is able to produce 8,300 bushels of wheat when he hires 4 workers. d. The farmer is able to produce 8,500 bushels of wheat when he hires 4 workers

a. The farmer is able to produce 7,560 bushels of wheat when he hires 4 workers.

Which of the following is a necessary characteristic of a monopoly? a. The firm is the sole seller of its product. b. The firm's product has many close substitutes. c. The firm generates a large economic profit. d. The firm is located in a small geographic market.

a. The firm is the sole seller of its product.

Granting a pharmaceutical company a patent for a new medicine will lead to a. a product that is priced higher than it would be without the exclusive rights. b. reduced incentives for pharmaceutical companies to invest in research and development. c. lower quantities of output than without the patent. d. lower prices than without the patent.

a. a product that is priced higher than it would be without the exclusive rights.

If the firm is maximizing profit, the firm is in a. a short-run equilibrium but it is not in a long-run equilibrium. b. a long-run equilibrium but it is not in a short-run equilibrium. c. a short-run equilibrium as well as a long-run equilibrium. d. neither a short-run equilibrium nor a long-run equilibrium.

a. a short-run equilibrium but it is not in a long-run equilibrium.

The firm will earn a positive economic profit in the short run if the market price is a. above $6.5. b. less than $6.5 but more than $3. c. less than $3. d. exactly $6.5

a. above $6.5.

Suppose the marginal product of the fifth unit of labor is 30 units of output per day. The figure implies that the a. price of output is $4. b. price of output is $6. c. price of output is $8. d. daily wage is $120

a. price of output is $4

If the relevant labor supply curve is S2 and the current wage is W1, a. there is a surplus of labor. b. the quantity of labor demanded exceeds the quantity of labor supplied. c. an increase in the minimum wage could restore equilibrium in the market. d. firms will need to raise the wage to restore equilibrium

a. there is a surplus of labor.

When 100 identical firms participate in this market, at what price will 15,000 units be supplied to this market? a. $1.00 b. $1.50 c. $2.00 d. The price cannot be determined from the information provided

b. $1.50

What is the average fixed cost for the month if 9 instructional modules are produced? a. $108.00 b. $120.00 c. $150.00 d. $811.11

b. $120.00

What is the average variable cost for the month if 6 instructional modules are produced? a. $180.00 b. $533.33 c. $700.00 d. $713.33

b. $533.33

The demand curve for a monopoly firm is depicted by curve a. D. b. A. c. B. d. C

b. A

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways? a. A competitive firm maximizes profit at the point where marginal revenue equals marginal cost; a monopolist maximizes profit at the point where marginal revenue exceeds marginal cost. b. A competitive firm maximizes profit at the point where average revenue equals marginal cost; a monopolist maximizes profit at the point where average revenue exceeds marginal cost. c. For a competitive firm, marginal revenue at the profit-maximizing level of output is equal to marginal revenue at all other levels of output; for a monopolist, marginal revenue at the profit-maximizing level of output is smaller than it is for larger levels of output. d. For a profit-maximizing competitive firm, thinking at the margin is much more important than it is for a profit-maximizing monopolist

b. A competitive firm maximizes profit at the point where average revenue equals marginal cost; a monopolist maximizes profit at the point where average revenue exceeds marginal cost.

Which of the following areas represents the profit for this profit maximizing monopolistically competitive firm? a. BCHG b. BCIJ c. GHIJ d. 0BCL

b. BCIJ

Fiona's hourly wage increases from $8 to $10. Which of the following describes a consequence of the increase in Fiona's wage? a. The opportunity cost of Fiona's leisure time has decreased. b. Fiona may choose to work fewer hours due to the increase in her wage. c. If Fiona's labor supply curve is upward sloping, she will choose to work fewer hours. d. If Fiona's labor supply curve is backward bending, she will choose to work more hours

b. Fiona may choose to work fewer hours due to the increase in her wage.

One characteristic of an oligopoly market structure is a. firms in the industry are typically characterized by very diverse product lines. b. firms in the industry have some degree of market power. c. products typically sell at a price equal to their marginal cost of production. d. the actions of one seller have no impact on the profitability of other sellers

b. firms in the industry have some degree of market power.

A monopolist's profits with price discrimination will be a. lower than if the firm charged a single, profit-maximizing price. b. the same as if the firm charged a single, profit-maximizing price. c. higher than if the firm charged just one price because the firm will capture more consumer surplus. d. higher than if the firm charged a single price because the costs of selling the good will be lower

b. the same as if the firm charged a single, profit-maximizing price.

Assume the firm in the figure is currently producing 20 units of output and charging $925. The firm a. will increase its profits if it raises its price and reduces its production level. b. will increase its profits if it lowers its price and expands its production level. c. is maximizing profits. d. will increase its profits if it raises its price and expands its production level.

b. will increase its profits if it lowers its price and expands its production level.

Ryzard decides to open his own business and earns $60,000 in accounting profit the first year. When deciding to open his own business, he withdrew $20,000 from his savings, which earned 6 percent interest. He also turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Ryzard's economic profit from running his own business? a. $18,800 b. $58,800 c. $13,800 d. $28,800

c. $13,800

Suppose the firm hires each unit of labor for $53 per day, and each unit of output sells for $11.What is the value of the marginal product of the fifth worker? a. $66 b. $55 c. $33 d. $44

c. $33

In order to maximize profits, the firm will produce a. 1 unit of output because marginal cost is minimized. b. 4 units of output because marginal revenue exceeds marginal cost. c. 5 units of output because marginal revenue equals marginal cost. d. 7 units of output because total revenue is maximized.

c. 5 units of output because marginal revenue equals marginal cost.

Based on the concentration ratio, which industry is the least competitive? a. Industry C b. Industry B c. Industry A d. Industry D

c. Industry A

In which of the following market structures can firms earn economic profits in the long run? a. Perfect competition only b. Monopolistic competition only c. Monopoly only d. Monopolistic competition and monopoly

c. Monopoly only

Curve B intersects curve D a. where the firm maximizes production. b. at the minimum of average fixed cost. c. at the efficient scale. d. where fixed costs equal variable costs

c. at the efficient scale.

If a monopolist is able to perfectly price discriminate, a. consumer surplus is always increased. b. total surplus is always decreased. c. consumer surplus and deadweight losses are transformed into monopoly profits. d. the price effect dominates the output effect on monopoly revenue

c. consumer surplus and deadweight losses are transformed into monopoly profits

A decrease in population can be expected to a. increase the marginal product of land. b. decrease the supply of land. c. decrease the rents on land. d. increase the demand for land.

c. decrease the rents on land.

The firm will earn a negative economic profit but remain in business in the short run if the market price is a. above $6.5 but less than $9. b. anywhere above $6.5. c. less than $6.5 but more than $3. d. less than $3

c. less than $6.5 but more than $3.

If the firm were to produce 154.92 units of output, a. efficient scale would not be realized. b. the firm would earn zero profit. c. the firm would earn a positive profit. d. ATC would be at its minimum value.

d. ATC would be at its minimum value.

Curve C represents which type of cost curve? a. Marginal cost b. Average total cost c. Average variable cost d. Average fixed cost

d. Avg Fixed Cost

Suppose that the wage paid to workers who de-tassel corn rises. What happens in the market for workers who weed soybean fields, given that workers who de-tassel corn can easily work weeding soybean fields? a. The demand curve for soybean workers increases. b. The demand curve for soybean workers decreases. c. The supply curve for soybean workers increases. d. The supply curve for soybean workers decreases.

d. The supply curve for soybean workers decreases.

When deciding what price to charge consumers, the monopolist may choose to charge them different prices based on the customers' a. favorite color. b. favorite school subject. c. marital status. d. geographical location

d. geographic location

If there is an increase in market demand in a perfectly competitive market, then in the short run a. there will be no change in the demand curves faced by individual firms in the market. b. the demand curves facing firms will shift downward. c. the demand curves facing firms will become more elastic. d. profits will rise.

d. profits will rise