Econ 120 Exam 3

Refer to the table above. What is the marginal revenue from selling the 4th unit

$120

Refer to figure above. If the market price is $10, what is the firm's short-run economic profit?

$15

Refer to the table above. For this firm, the marginal revenue from selling the next unit is

$15

In a competitive market the price is $8. a typical firm is the market has ATC = $6, AVC = $5, and MC = $8. How much economic profit is the firm earning in the short run?

$2 per unit

Refer to figure above. If the market price is $10, what is the firms total cost?

$35

Refer to the table above. What is the total revenue from selling 4 units

$480

Refer to the table above. Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. What is the total daily cost of producing at a rate of 55 chairs per hour if the factory operates 8 hours per day?

$520

Suppose a certain firm is able to produce 125 units of output per day when 19 workers are hired. The firm is able to produce 137 units of output per day when 20 workers are hired, holding other inputs fixed. The marginal product of the 20th worker is

12 units of output

Katherine gives piano lessons for $45 per hour. She also grows flowers, which she arranges and sells at the local farmer's market. One day she spends 5 hours planting $50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $450 at the farmer's market. Katherine's accounting profits are

400, and economic profits are 175

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

A grain farmer in Illinois

Refer to the Figure above. Curve B intersects curve D

At the efficient scale

Refer to the figure above. Curve C represents which type of cost curve?

Average Fixed Cost

For an individual firm operating in a competitive market, marginal revenue equals

Average revenue and the price for all levels of output

Marginal cost is equal to average total cost

Average total cost is at it minimum

Refer to table above. A membership at a gym that always has space in classes and on machines is an example of the type of good represented by Box

B

Which of the following is not a characteristic of a public good?

Because it is a free good, there is no opportunity cost

Refer to table above. Emma's use of good x does not affect anyone else's use of good x. Neither Emma nor anyone else can be prevented from using the good. Good x is an example of the type of good that belongs in

Box D, public good

Goods that are rival in consumption but not excludable would be considered

Common Resources

A firm operating in a perfectly competitive market may earn positive, negative, or zero economic profit in the long run

False

A free rider is a person who pays for a good but does not receive the benefit of it

False

In the short-run, a firm should exit the industry if its marginal cost exceeds it marginal revenue

False

Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service

False

The profit motive that stems from private ownership means that elephant populations are best protected as common resource

False

The shape of the total-cost curve is unrelated to the shape of the production function

False

Variable costs equal fixed costs when nothing is produced

False

Which of the following expressions is correct for a competitive market

Profit = (quantity of output) x (Price - average total cost)

People cannot be prevented from using a good if the good is a

Public or common resource

Refer to the table above. The Wooden Chair Factory experiences diminishing marginal product of labor with the addition of which worker?

The sixth worker

Accountants often ignore implicit costs

True

Firms operating in perfectly competitive markets try to maximize profits

True

Roads can be considered either public goods or common resources, depending on how congested they are

True

For most goods in an economy, the primary signal that guides the decisions of buyers and sellers is

d. price

Which of the following expressions is correct?

accounting profit = economic profit + implicit costs

A lighthouse is typically considered to be a public good because

all passing ships are able to enjoy the benefits of the lighthouse without paying

When marginal cost is less than average total cost,

average total cost is falling

Profit-maximizing firms enter a competitive market when existing firms in that market have

average total costs that are less than market price

Before considering any public project, the government should

conduct a cost-benefit analysis and compare the total cost and total benefits of the project

Competitive markets are characterized by

free entry and exit by firm

A difference between explicit and implicit costs is the

implicit cost do not require a direct monetary outlay by the firm, whereas explicit costs do

If a competitive firm is selling 900 units of its products at a price of $10 per unit and earning a positive profit, then

its average total cost is less than $10

An example of an explicit cost of production would be the

lease payments for the land on which a firm's factory stands

Refer to the figure above. As the number of workers increase

marginal product decreases

A traffic light at an intersection is

not rival and not excludable in consumption

When a good is rival in consumption,

one person's use of the good diminishes another person's ability to use it

Goods that are excludable include both

private goods and club goods

A free rider is a person who

recieves the benefit of a good but avoids paying for it

Total cost is

the market value of the inputs a firm uses in production

If a firm uses labor to produce output, the firm's production function depicts the relationship between

the number of workers and the quantity of output

The short-run supply curve for a firm in a perfectly competitive market is

the portion of its marginal cost curve that lies above its average variable cost

Producers have little incentive to produce a public good because

there is a free-rider problem