micro final

An effective price ceiling causes a loss of: A) neither producer nor consumer surplus. B) producer surplus for certain and possibly consumer surplus as well. C) producer surplus only. D) consumer surplus only. E) consumer surplus for certain and possibly producer surplus as well.

B

Because of the relationship between a perfectly competitive firm's demand curve and its marginal revenue curve, the profit maximization condition for the firm can be written as: A) P = AVC. B) P = MC. C) AR = MR. D) P = AC. E) P = MR.

B

In long-run competitive equilibrium, a firm that owns factors of production will have an: A) economic and accounting profit = $0. B) economic profit = $0 and accounting profit > $0. C) economic profit > $0 and accounting profit = $0. D) economic and accounting profit can take any value. E) economic and accounting profit > $0.

B

Refer to Figure 9.1.1 above. If the government establishes a price ceiling of $20, total consumer and producer surplus will be: A) $600. B) $900. C) $400. D) $1200. E) $30.

B

Refer to Figure 9.1.1 above. If the market is in equilibrium, the consumer surplus earned by the buyer of the 1st unit is: A) $22.50. B) $40.00. C) $15.00. D) $5.00

B

Use the following statements to answer this question: I. Markets that have only a few sellers cannot be highly competitive. II. Markets with many sellers are always perfectly competitive. A) II is true and I is false. B) I and II are false. C) I and II are true. D) I is true and II is false.

B

A few sellers may behave as if they operate in a perfectly competitive market if the market demand is: A) highly inelastic. B) composed of many small buyers. C) very elastic. D) unitary elastic

C

Marginal profit is equal to: A) marginal revenue plus marginal cost. B) marginal revenue times marginal cost. C) marginal revenue minus marginal cost. D) marginal cost minus marginal revenue. E) marginal revenue divided by marginal cost.

C

Refer to Figure 8.3.2. The demand of a price taker is illustrated: A) in both panels. B) by neither curve. C) in panel (a) D) in panel (b)

C

Refer to Figure 8.4.1. The shaded area in the graph shows: A) the increase in profit when output is reduced from 8 to 7 units of output. B) the amount of profit when 8 units of output are produced. C) the profit that could be made if output increases from 7 to 8 units of output. D) the deadweight loss associated with the power of the price taking firm.

C

Refer to Figure 8.4.2 above. When the coffee farmer maximizes profit, how much is his profit? A) $116 B) $1,624 C) $2,134 D) $97

C

A firm maximizes profit by operating at the level of output where: A) total costs are minimized. B) average revenue equals average variable cost. C) average revenue equals average cost. D) marginal revenue equals marginal cost. E) marginal revenue exceeds marginal cost by the greatest amount.

D

Refer to Figure 8.4.3 above. The firm in this situation should decide to: A) produce and earn the resulting profit. B) shut down. C) produce or shut down, with the same outcome. D) produce at a loss

D

Refer to Figure 9.5.1 above. In order to eliminate international trade in sugar altogether, this country would have to impose a tariff of: A) $150. B) $25. C) $50. D) $75. E) $175.

D

Refer to Figure 9.5.1 above. With no government interference, the country pictured will: A) import 200 tons of sugar. B) import 500 tons of sugar. C) import no sugar. D) import 300 tons of sugar. E) export sugar.

D

A price taker is: A) a firm that accepts different prices from different customers. B) a consumer who accepts different prices from different firms. C) a perfectly competitive firm. D) a firm that cannot influence the market price. E) both C and D

E

Refer to Figure 9.5.1 above. In order to gain the equivalent imports as a $50 tariff, the government would have to impose a quota of: A) 300 tons of sugar. B) 500 tons of sugar. C) 200 tons of sugar. D) 350 tons of sugar. E) 100 tons of sugar.

E

Refer to Table 8.1. That the firm is perfectly competitive is evident from its: A) increasing total cost. B) increasing marginal cost. C) zero economic profits. D) absence of marginal values at Q = 0. E) constant marginal revenue.

E

Refer to Figure 8.4.2 above. When average variable cost (AVC) is minimum, A) AVC = MC. B) the firm suffers a loss. C) profit is maximized. D) AVC = ATC.

A

Refer to Figure 8.4.2. The figure describes the cost and revenue structure of a perfectly competitive coffee farm, on a per-unit basis. What is the profit maximizing number of sacks when the price of coffee in the market is $380 dollars? A) 22 sacks B) 14 sacks C) 6 sacks D) 14 or 22 sacks

A