Econ Exam 2

Réussis tes devoirs et examens dès maintenant avec Quizwiz!

Rose growing is perfectly competitive and all growers have the same costs. The market price is ​$13 a bunch and each grower maximizes profit by producing 400 bunches a week. Average total cost is ​$12 a bunch and average variable cost is ​$7 a bunch. Minimum average variable cost is ​$3 a bunch. What is the price at the​ grower's shutdown​ point?

The price at the grower's shutdown point is $3 a bunch.

Tulip growing is a perfectly competitive industry and all tulip growers have the same cost curves. The market price of tulips is ​$8 a bunch and each grower maximizes profit by producing 2,200 bunches a week. The average total cost of producing tulips is ​$14 a bunch. Minimum average variable cost is ​$4 a bunch​, and the minimum average total cost is ​$10 a bunch. In the long​ run, what is the price and the tulip ​grower's economic​ profit? In the long​ run, the market price of tulips is​ _______ a bunch.

$10 In the long run, a tulip grower's economic profit is $0.

The supply of luxury boats is perfectly​ elastic, the demand for luxury boats is unit​ elastic, and with no tax on luxury boats the price is ​$2 million and 470 luxury boats a week are bought. Now luxury boats are taxed at 40 percent tax. What price do buyers​ pay? How is the tax split between buyers and​ sellers? What is the​ government's tax​ revenue? Is this tax​ efficient? With the tax​ imposed, the price of a luxury boat is​ _______. With the 40 percent tax on luxury​ boats, _______. The tax is​ ____ because at the quantity produced​ _____.

$2.80 million the buyer pays all of the tax The government raises tax revenue of $268.80 million. SHAPE: (350,2.00) (350,2.80) (470,2.00) inefficient; marginal benefit exceeds marginal cost

Bob's Books is the only bookstore in town. The graph shows the demand curve for books and​ Bob's Books' marginal revenue curve and marginal cost curve. What is​ Bob's Books​ profit-maximizing output and​ price? ​Bob's Books maximizes its profit by charging​ _______ a book and selling​ _______ books a year.

$23; 15,000

The graph shows the market for tomato pickers in southern California. If California introduces a minimum wage for tomato pickers of ​$12.00 an​ hour, how many pickers are employed and how many are​ unemployed? What is the lowest wage that some workers might be able to earn if a black market​ develops?

3,000 2,000 $6

What are natural or legal forces that work to protect a firm from potential​ competitors? When natural or legal forces work to protect a firm from potential​ competitors, the market is said to have​ _______.

A BARRIER TO ENTRY

Classify each of the following items as a final good or an intermediate​ good, and classify the expenditure on each final good as consumption expenditure or​ investment: Item 1. A DVD bought by a household Item 2. Trucks bought by Fedex Item 3. New concrete mixers bought by Chicago Concrete Inc Item 4. Cardboard boxes bought by Amazon.com Item 1 is​ _______ and item 2 is​ _______. Item 3 is ______ and item 4 is ______.

A FINAL GOOD THAT IS CONSUMPTION EXPENDITURE; A FINAL GOOD THAT IS INVESTMENT A FINAL GOOD THAT IS INVESTMENT; AN INTERMEDIATE GOOD

Before​ 1991, the eight Ivy League colleges​ (Brown, Columbia,​ Cornell, Dartmouth,​ Harvard, Princeton, the University of​ Pennsylvania, and​ Yale), along with​ MIT, shared information and agreed on rules for setting their prices of education​ (price equals tuition minus​ scholarship). Since​ 1991, these schools have set their prices in competition with each other. How did the market for an Ivy League education change before and after​ 1991? Before​ 1991, the Ivy League schools​ _______. After​ 1991, tuition at the Ivy League schools​ _______ and the number of students​ _______.

ACTED AS A MONOPOLY AND CHARGED THE MONOPOLY TUITION BECAME COMPETITIVE AND TUITION ROSE; INCREASED, DECREASED, OR REMAINED THE SAME

Suppose the government introduces a ceiling on the fees that accountants are permitted to charge. Would this fee ceiling result in an efficient and fair use of​ resources? Why or why​ not? A fee ceiling set below the market equilibrium fee results in​ ______. If the fee ceiling is set below the market​ equilibrium, then, by the​ _______ view of​ fairness, the outcome is​ _________ .

AN INEFFICIENT USE OF RESOURCES BECAUSE THE MARGINAL BENEFIT OF ACCOUNTING SERVICES EXCEEDS THE MARGINAL COST OF ACCOUNTING SERVICES FAIR-RULES; UNFAIR BECAUSE THE FEE CEILING BLOCKS VOLUNTARY EXCHANGE

What is U.S. gross domestic​ product? U.S. gross domestic product is the market value of all the​ _______ produced​ _______ in a given time period.

FINAL GOODS AND SERVICES; WITHIN THE UNITED STATES

Before​ 1991, the eight Ivy League colleges​ (Brown, Columbia,​ Cornell, Dartmouth,​ Harvard, Princeton, the University of​ Pennsylvania, and​ Yale), along with​ MIT, shared information and agreed on rules for setting their prices of education​ (price equals tuition minus​ scholarship). Since​ 1991, these schools have set their prices in competition with each other. What has happened to the efficiency of the​ market, to the distribution of producer surplus and consumer​ surplus, and to deadweight loss. Moving from 1991 to​ today, everything else remaining the​ same, the Ivy League market for education​ _______. Producer surplus​ _______. Consumer surplus​ _______. Deadweight loss​ _______.

BECAME MORE EFFICIENT DECREASED; INCREASED; DECREASED

​Joe's Shiny Shoes is a firm that operates in a competitive market. The graph shows​ Joe's marginal cost curve and average variable cost curve. What curve segment is part of​ Joe's supply​ curve? The curve segment​ _______ is part of​ Joe's supply curve

CD

The graph shows the market for lawnmowers when lawnmowers are taxed. What is the amount of consumer​ surplus, producer​ surplus, deadweight​ loss, and tax revenue after the imposition of the​ tax?

Consumer surplus is $900 Producer surplus is $900 The deadweight loss is $200 Tax revenue is $1200

Suppose the government introduces a ceiling on the fees that trainers are permitted to charge. How would the amount of work done by trainers​, the consumer surplus of people who hire trainers​, and the producer surplus of gyms ​change? If the fee ceiling is set below the market equilibrium​ fee, the amount of work done by trainers will​ _______. With the fee​ ceiling, the consumer surplus of people who hire trainers _______, and the producer surplus of gyms ________.

DECREASE DECREASES; DECREASES

BHP Billiton to axe​ 6,000 jobs The price of coal has fallen to​ $125 a ton from​ $300 a ton. BHP Billiton will cut​ production, lay off​ 6,000 workers, and close some mines for six months. ​Source: FT.com, January​ 21, 2009 As BHP responded to the fall in​ price, how did its marginal cost​ change? What is minimum average variable cost in the mines that closed​ temporarily? As BHP responded to the fall in​ price, its marginal cost​ _______. The minimum average variable cost in the mines that closed temporarily is​ _______.

FELL FROM $300 A TON TO $125 A TON; BETWEEN $125 A TON AND $300 A TON

Congress passes increase in the minimum wage In​ 2007, Congress voted to raise the minimum wage to​ $7.25 an hour from​ $5.15. For about 5.6 million​ low-income workers, it was a major victory—the first increase in the federal minimum wage rate in a decade. ​Source: New York Times​, May​ 24, 2007 If the new federal wage of​ $7.25 an hour is​ effective, how does the higher minimum wage change​ workers' surplus and​ firms' surplus? Does the labor market become more or less​ efficient? Did Congress hand a major victory to all workers who earned the minimum wage of​ $5.15 an​ hour? If the new federal wage of​ $7.25 an hour is​ effective, then the higher minimum wage​ ______ workers' surplus and​ ______ firms' surplus. The labor market becomes​ _______ efficient. Congress​ ________ hand a major victory to all workers who earned the minimum wage of​ $5.15 an hour.

DECREASES; DECREASES LESS; DID NOT

The graph shows the market for​ no-name soda. The government imposes a tax of​ $2 per case on​ no-name soda. The sellers of​ no-name soda pay the entire tax. Draw the demand curve for​ no-name soda. Label it D. How does the price elasticity of demand determine who pays the​ tax? The more​ ______ the​ demand, ______.

DEMAND CURVE: (1,6) (10,6) ELASTIC; THE LARGER IS THE AMOUNT OF THE TAX PAID BY SELLERS

​California's commercial drone industry is taking off Customers are finding ever more creative ways to use​ drones, and 3D Robotics​ Inc., America's largest producer of consumer​ drones, expects sales to soar. commercial​ drones? How would you expect the price of a drone and the economic profit of a drone producer such as 3D Robotics to change in the short run and in the long​ run? The​ _______ drones is​ _______ in the short run. In the short​ run, the equilibrium price of a drone​ _______ and the economic profit of drone producers​ _______. In the long​ run, _______ the price of a​ drone, and drone producers make​ _______

DEMAND FOR; INCREASING RISES; INCREASES ENTRY OF NEW DRONE PRODUCERS LOWERS; ZERO ECONOMIC PROFIT

The supply of apartments in New York City is​ inelastic, and the demand for apartments is elastic. The city introduces a tax on apartment rentals. When is the larger share of the tax paid by the​ landlord? Why does the government collect a large tax​ revenue? The more​ _______ the demand and the more​ _______ the supply of​ apartments, the larger is the share of the tax paid by the landlord. The government collects a large tax revenue because the tax​ ______ the number of apartments rented.

ELASTIC; INELASTIC DECREASES BY A RELATIVELY SMALL AMOUNT

The graph illustrates the demand for haircuts and the costs of producing haircuts. How do we redefine the curves in the graph when a perfectly competitive industry is taken over by a single​ firm? When a perfectly competitive industry is taken over by a single​ firm, the competitive​ industry's _______ curve becomes the​ monopoly's _______ curve.

EM: (2.0,20) EC: (3.0,15) SUPPLY; MARGINAL COST

Cook's Tall Ship Cruises is a​ single-price monopoly. The table shows the demand schedule for cruises ​(columns 1 and​ 2) and Cook's total cost schedule​ (columns 2 and​ 3). Calculate Cook's total revenue and marginal revenue schedules and fill in the two right columns of the table.

FROM TOP TO BOTTOM: 0 140 140 120 260 100 360 80 440 60 500

Hannah's Salon is a​ single-price monopoly. The table shows the demand schedule for Hannah's haircuts ​(columns 1 and​ 2) and the​ firm's total cost schedule​ (columns 2 and​ 3). Calculate Hannah's total revenue and marginal revenue schedules.

FROM TOP TO BOTTOM: 0 9 9 7 16 5 21

Harvey's Day Spa is a​ single-price monopoly. The table shows the demand schedule for Harvey's Day Spa ​(columns 1 and ​ 2) and the​ firm's total cost schedule​ (columns 2 and​ 3). What is Harvey's ​profit-maximizing output,​ price, and economic​ profit?

Harvey's profit-maximizing output is 3 treatments an hour. Harvey's profit-maximizing price is ​$7 a treatment. When Harvey's produces the​ profit-maximizing output and charges the​ profit-maximizing price, economic profit is ​$14 an hour.

When is price discrimination​ possible? Price discrimination is possible when a firm is able to​ _______.

IDENTIFY AND SEPARATE DIFFERENT TYPES OF BUYERS, AND SELL A PRODUCT THAT CANNOT BE RESOLD

Beijing loosens fuel prices in boon to refiners China moved to raise the price ceiling on gasoline and diesel on Tuesday. Lin Boqiang of Xiamen University advised the government on pricing reform and said the​ "move is in the right​ direction, even if​ it's not a complete market​ price." ​Source: The Wall Street Journal​, March​ 26, 2013 How does raising the price ceiling on fuel change consumer​ surplus, producer​ surplus, and deadweight​ loss? As the price ceiling on fuel increases toward the market​ price, consumer surplus will​ _______. As the price ceiling on fuel increases toward the market​ price, producer surplus ​ _______ and the deadweight loss ​ _______.

INCREASE BECAUSE THE FUEL SHORTAGE WILL DECREASE AND PEOPLE WILL PURCHASE A LARGER QUANTITY OF FUEL INCREASES BECAUSE AT THE HIGHER PRICE CEILING PRODUCERS WILL SELL A LARGER QUANTITY OF FUEL'; DECREASES AS THE GAP BETWEEN MARGINAL BENEFIT AND MARGINAL COST AT THE QUANTITY SUPPLIED DECREASES

Expansion remains slow The Commerce Department reported that retail sales increased 1.3 percent in June. Net exports were up 0.8 percent in the first quarter and inventories held by businesses rose by 0.3 percent in June. Total sales by businesses rose 0.3 percent. What is the effect of the rise in net exports on​ GDP? The rise in net exports​ _______.

INCREASES GDP

If California introduces a minimum wage for tomato pickers of ​$16.00 an​ hour, is the minimum wage of ​$16.00 an hour​ efficient? Is it​ fair? Who gains and who loses from the minimum wage of ​$16.00 an​ hour? The graph shows the market for tomato pickers in southern California. If California introduces a minimum wage for tomato pickers of ​$16.00 an​ hour, the minimum wage is​ ______. With the minimum​ wage, ______ gain and​ ______ lose.

INEFFICIENT AND NOT FAIR TOMATO PICKERS WHO FIND WORK; TOMATO GROWERS AND UNEMPLOYED PICKERS

The graph shows the market for a​ vital-to-life drug. If the government imposes a tax on the​ drug, what determines how the tax is split between buyers and​ sellers? The more​ ______ the demand for the​ drug, ______.

INELASTIC; THE LARGER IS THE AMOUNT OF THE TAX PAID BY THE BUYER OF THE DRUG DEMAND CURVE: (6,1) (6,10)

Which of the following statements describes a firm in a perfectly competitive​ market? In a perfectly competitive​ market, each firm​ _______.

IS A PRICE TAKER AND PRODUCES THE QUANTITY THAT MAXIMIZES ITS PROFIT IN BOTH THE SHORT RUN AND THE LONG RUN

Oakdale​, a small isolated​ town, has one psychiatrist. For a 30​-minute ​consultation, the psychiatrist charges an adult twice as much as a senior. Does the psychiatrist practice price​ discrimination? Is the psychiatrist using resources​ efficiently? Does the psychiatrist​'s pricing scheme redistribute consumer​ surplus? The psychiatrist ​_______ practicing price discrimination because​ _______. The psychiatrist _______ using resources efficiently because​ _______. This pricing system​ _______.

IS; ADULTS AND SENIORS ARE PAYING A DIFFERENT PRICE FOR THE SAME SERVICE IS NOT; A DEADWEIGHT LOSS IS CREATED TAKES SOME CONSUMER SURPLUS FROM THE CONSUMER AND REDISTRIBUTES IT TO THE PSYCHIATRIST AS ECONOMIC PROFIT

The graph shows the market for​ basketballs, when basketballs are not taxed. If buyers of basketballs are taxed​ $6 a​ ball, what price does the buyer pay and how many basketballs do they​ buy? What is the tax revenue​ collected?

If buyers are taxed​ $6 a​ ball, the price that buyers pay for a basketball is $16. The number of basketballs bought is 8 million. The tax revenue from the sale of basketballs is ​$48 million.

The graph shows the market for​ basketballs, when basketballs are not taxed. If sellers of basketballs are taxed​ $6 a​ ball, what price does the seller receive and how many basketballs do they​ sell? What is the tax revenue​ collected?

If sellers are taxed​ $6 a​ ball, the price that sellers receive for a basketball is ​$10. The number of basketballs bought is 8 million. The tax revenue from the sale of basketballs is ​$48 million.

The table shows the demand and supply schedules for​ on-campus housing. If the college puts a rent ceiling on rooms of ​$375 a​ month, what is the​ rent, how many rooms are​ rented, and is the​ on-campus housing market​ efficient?

If the college puts a rent ceiling on rooms of ​$375 a​ month, the rent is ​$325 and the number of rooms rented is 5250. The​ on-campus housing market is EFFICIENT.

The graph shows the​ short-run cost curves of a toy producer. The market has​ 1,000 identical toy producers. At a market price of​ $21 a​ toy, what quantity does the firm produce in the short run and does the firm make a positive economic​ profit, a zero economic​ profit, or an economic​ loss? The firm​ _______ in the short run.

In the short run, the firm produces 2000 toys a week. MAKES A POSITIVE ECONOMIC PROFIT

Minnie's Salon is a​ single-price monopoly. The table gives Minnie's demand schedule. Price ​(dollars per haircut​) Quantity ​(haircuts per​ hour) 15 0 14 1 13 2 12 3 11 4 10 5 Draw the following points on the demand curve to show the quantity demanded

LABEL 1: (0,15) LABEL 2: (5,10) D: FROM POINT 1 TO 2 LABEL 3: (0.5,14) LABEL 4: (4.5,6) MR: FROM POINT 3 TO 4

Some Seattle restaurants struggle with​ $15 minimum wage 5 years later Seattle voted to raise the minimum wage to​ $15 an hour nearly five years ago. It radically changed the way restaurants do business. Whether that is good or bad depends on​ who's talking. ​Source: KOMO​ News, May​ 18, 2019 What is the effect of the​ $15 an hour minimum wage on​ employment? In the​ graph, when the minimum wage rises from​ $13 an hour to​ $15 an​ hour, employment​ _______.

LABEL 1: (199.8, 13.50) LABEL 2: (101.6, 15.00) DECREASES AND SOME WORKERS ARE UNEMPLOYED

Big Top is the only circus in the nation. The graph shows the demand curve for circus​ tickets, the average total cost​ curve, and the marginal cost curve. Draw a horizontal line at the price cap that regulators set that enables the Big Top to break even. Label it. Draw a shape to show the deadweight loss when regulators set a price cap that enables the Big Top to break even.

LINE: AT 8 SHAPE: TRIANGLE FROM (600,8) TO (600,6.5) ACROSS TO (700,6.5)

Big drops in prices for crops make it tough down on the farm Grain prices have become more closely tied to oil prices because of the expansion of the​ corn-based ethanol industry. What is the effect of the falling oil price on the market for​ ethanol? If the price of oil remains low for some​ years, what will be the​ long-run effects on the market for ethanol and the number of ethanol​ producers? The falling oil price​ _______ the price of ethanol. If the price of oil remains low for some years and ethanol producers are incurring an economic​ loss, then in the long run​ _______.

LOWERS; SOME PRODUCERS WILL EXIT THE MARKET, DEMAND WILL INCREASE, AND EACH FARMER THAT REMAINS IN THE MARKET WILL RECEIVE A HIGHER PRICE LABEL 1: (50, 1.00) MR1: (0, 0.75) TO (80, 0.75) LABEL 2: (30, 0.75) SHAPE: square from (0,0.75) up to (0,1.25) across to (30,1.25)

The table shows the demand schedule for Lila's Firewood. What is Lila's marginal revenue for each quantity​ demanded? Compare Lila's marginal revenue and price. In what type of market does Lila's Firewood ​operate? Lila's marginal revenue​ _______ price. Lila's Firewood operates in a market called​_______.

Lila's marginal revenue for each bundle of firewood demanded is $15. EQUALS PERFECT COMPETITION

Perfect competition is a market in which there are​ _____ firms, each selling​ _____ product; many​ buyers; _____ to the entry of new firms into the​ industry; no advantage to established​ firms; and buyers and sellers​ _____ about prices.

MANY; IDENTICAL; NO BARRIERS; ARE WELL INFORMED

A firm will shut down in the short run if at the​ profit-maximizing quantity,​ ______.

MARGINAL REVENUE IS LESS THAN AVERAGE VARIABLE COST

How is price and quantity determined in a perfectly competitive​ market? How is economic profit​ calculated? In a perfectly competitive market in​ short-run equilibrium,​ _______. When a firm makes an economic profit in the short​ run, it is calculated as​ _______.

MARKET SUPPLY AND MARKET DEMAND DETERMINE THE PRICE AND QUANTITY BOUGHT AND SOLD IN THE MARKET MARKET PRICE MINUS AVERAGE TOTAL COST, MULTIPLIED BY THE QUANTITY PRODUCED

With the increased popularity of​ smartphones, the government imposes a tax of​ $20 a smartphone and a tax of 10¢ a call made on a smartphone. Suppose that the supply of smartphones is elastic and the demand for smartphones is inelastic. Suppose that the supply of calls is perfectly elastic and the demand for calls is elastic. Who pays more of the tax on​ smartphones? Who pays more of the tax on phone​ calls? What happens to the number of​ calls? The buyer pays​ _______ of the tax on a phone than the seller. The buyer pays​ _______ of the tax on a call than the seller. The number of calls​ _______ because​ _______.

MORE; MORE DECREASES; THE RISE IN THE PRICE OF A SMARTPHONE DECREASES THE DEMAND FOR CALLS, WHICH DECREASES THE NUMBER OF CALLS MADE

California plans to crack down on the use of fumigants by growers of strawberries. The biggest burden will fall on Ventura​ County's growers, who produce about 90 percent of the​ nation's crop. On the​ graph, show the​ long-run effects of the pollution crackdown.

MR1: HORIZONTAL LINE ACROSS 2 POINT: (8,2)

An unregulated natural monopoly bottles ReNew​, a unique product with no substitutes. The​ monopoly's total fixed cost is $130,000 and its marginal cost is 10 cents a bottle. How many bottles of ReNew does the monopoly sell and what is the price of a bottle of ReNew​? Is the​ monopoly's use of resources​ efficient? The firm​ _______ produce the efficient quantity because​ _______.

MR: (0,100) TO (10,0) MC: HORIZONTAL LINE ACROSS 10 POINT: (9,55) ReNew sells 9 million bottles a year and the price is 55 cents a bottle. DOES NOT; MARGINAL BENEFIT EXCEEDS MARGINAL COST

Tiny is an isolated community served by one newspaper that can meet the market demand at a lower cost than two or more newspapers could. The Tiny Intelligencer is the only source of news. The graph shows the marginal cost of printing the paper and the market demand curve. The Tiny Intelligencer is a​ profit-maximizing, single-price monopoly.

MR: FROM (0,120) TO (300,0) LABEL 1: SQUARE FROM (0,70) TO (0,90) ACROSS TO (150,90) LABEL 2: TRIANGLE FROM (150,90) TO (150,60) ACROSS TO (250,70)

A natural monopoly cans Mt. McKinley air​, a unique clean air that has no substitutes. The graph illustrates the demand curve for this clean air. How many cans a year does the monopoly sell and what is the price of a can​?

MR: FROM (0,70) TO (14.5,0) MC: FROM (O,70) TO (28,0) POINT: (10,45) The monopoly sells 10000 cans a year and the price is 45 cents a can.

Under what conditions does monopoly​ arise? Under what conditions can a monopoly price​ discriminate? A monopoly arises when there are​ _______. A monopoly can price discriminate only if​ _______.

NO CLOSE SUBSTITUTES AND A BARRIER TO ENTRY IT SELLS GOOD AND SERVICES THAT CANNOT BE RESOLD

Rick is a potato farmer and the world potato market is perfectly competitive. The market price is ​$13 a basket. Rick sells 1,300 baskets a week and his marginal cost is ​$18 a basket. Is Rick maximizing​ profit? Why or why​ not? Rick is​ _______.

NOT MAXIMIZING PROFIT BECAUSE MARGINAL COST IS GREATER THAN MARGINAL REVENUE

Consider the markets for strawberries​, computers​, dog food​, ice cream​, and cable TV in a town with one cable company. In what type of market is each good or service​ sold? The market in which the firms that sell strawberries operate is​ _______. The firms that sell computers operate in​ _______ Firms that sell dog food operate in​ _______. Producers of ice cream operate in​ _______. Cable TV in a town with one cable company is an example of​_______.

PERFECT COMPETITION; MONOPOLISTIC COMPETITION AN OLIGOPOLY; MONOPOLISTIC COMPETITION A MONOPOLY

The graph shows the market for chocolate bars. If a new tax of​ $1.50 a chocolate bar is​ imposed, what is the change in the quantity of chocolate bars​ bought, who pays most of the​ tax, and what is the deadweight​ loss?

POINT 1: (6,3.00) S TAX: (3.50,0) (7,5.00) POINT 2: (4,4.00) POINT 3: (4,2.50) The BUYER pays most of the tax. The deadweight loss is $1.5 million.

Lila's firm produces fortune cookies. Draw Lila's ​short-run supply curve. Why is only part of Lila's ​short-run supply curve the same as its marginal cost​ curve? When market price is​ _______, Lila's ​short-run supply curve runs along the y​-axis and is not the same as the marginal cost curve.

POINT 1: (7.5, 73) POINT 2: (6,41) POINT 3: (5,25) S1: FROM POINT 3 TO POINT 1 S2: (0, 41) BELOW MINIMUM AVERAGE VARIABLE COST

Big Top is the only circus in the nation. The graph shows the demand curve for circus​ tickets, the average total cost​ curve, and the marginal cost curve. When Big Top is regulated to charge a price equal to average total​ cost, what is its economic​ profit?

POINT: (600,8.00) Economic profit is ​$0.

Turkey farming is a perfectly competitive industry and all turkey farms have the same cost curves. When the market price is ​$38 a turkey​, farms maximize profit by producing 800 turkeys a week. At this​ output, average total cost is ​$36 a turkey​, and average variable cost is ​$14 a turkey. Minimum average variable cost is ​$9 a turkey. If the price falls to ​$36 a turkey​, will a turkey farm produce 800 turkeys a​ week? If the price falls to $36 a turkey​, a turkey farm will​ _______.

PRODUCE FEWER THAN 800 TURKEYS A WEEK

Sandy Cove is the only beach resort on a small island and the only beach activity it offers is jet ski rides. The graph shows the marginal cost of a ride and the demand for rides. The resort is a​ single-price monopoly. What is the number of rides taken each hour and the price of a​ ride?

REVENUE CURVE: FROM (0,30) TO (3,0) The number of rides taken each hour is 1.50. The price of a ride is ​$22.50.

Quebec losing hold over maple syrup industry to U.S. competition The Federation of Quebec Maple Syrup Producers tries to limit production and stockpiles a​ "strategic reserve" to keep the price of syrup high. But Quebec producers are feeling increased competition from​ Vermont, New​ York, and​ Maine, where market share has increased and is expected to increase further in 2017 and 2018. If the demand for maple syrup​ increases, what will happen to​ price, quantity, and the economic profit of a producer in the short run and in the long​ run? As a result of an increase in the demand for maple​ syrup, the price of maple syrup​ _______. In the long​ run, the price of maple syrup​ _______ and producers​ _______.

RISES MR1: HORIZONTAL LINE ACROSS 40 POINT: (500,35) SHAPE: (0,38) TO (0,40) ACROSS TO (600,40) FALLS; MAKE ZERO ECONOMIC PROFIT

The graph shows the market for​ basketballs, when sellers are taxed​ $6 a ball. What is the excess burden of the​ tax? Is the demand for basketballs or the supply of basketballs more​ inelastic?

SHAPE: (8,16) (8,10) (12,15) The excess burden of the tax on basketballs is ​$12 million. The supply of basketballs is more​ _______ than the demand for​ basketballs, and the​ _______ pays most of the tax. inelastic; seller

The following statements give some information about six firms. a. ​ Coca-Cola cuts its price below that of​ Pepsi-Cola in an attempt to increase profit. b. A single​ firm, protected by a barrier to​ entry, produces a personal service that has no close substitutes. c. A barrier to entry​ exists, but the good has some close substitutes. d. A museum offers discounts to students and seniors. e. A firm can sell any quantity it chooses at the going price. f. A firm experiences economies of scale even when it produces the quantity that meets the entire market demand. Which are natural monopolies and which are legal​ monopolies? Can any of them price​ discriminate? If​ so, why? The firm described in​ _______ is a natural monopoly. The firm described in​ _______ is a monopoly and it may be a legal monopoly. The firm described in​ _____ can price discriminate because​ _____.

STATEMENT F; STATEMENT B STATEMENT B; A PERSONAL SERVICE CANNOT BE RESOLD

The graph shows the market for dog groomers organized by the Dog Groomers' Union in Toledo, Ohio. What is the wage rate that dog groomers earn and how many dog groomers are​ employed? When the Dog Groomers' Union sets the minimum wage for dog groomers at ​$40.00 an​ hour, how many dog groomers are employed how much do they​ earn? How many dog groomers are​ unemployed?

The wage rate that dog groomers earn is ​$30 an hour and the number of dog groomers employed is 300. When the Dog Groomers' Union sets the minimum wage for dog groomers at ​$40.00 an​ hour, 150 dog groomers are employed and they earn ​$40 an hour. The number of dog groomers unemployed is 300.

Tom's Family Photos is a photographic portrait business in a perfectly competitive market in Fargo. The market price of a portrait is ​$75.00. The table shows Tom's total costs. How many portraits does Tom sell in an hour and what is Tom's economic profit in the short​ run?

Tom's Family Photos sells 5 portraits an hour. In the short run, Tom's MAKES AN ECONOMIC PROFIT of $35 an hour.

The table shows the demand and supply schedules for yoga instructorsin Texas. If Texas introduces a strictly enforced minimum wage for yoga instructors of ​$7.00 an​ hour, who gains and who loses from the minimum​ wage, and is the labor market efficient or​ fair? With the minimum​ wage, _______ gain and​ _______ lose. The strictly enforced minimum wage for yoga instructors of $7.00 an hour​ _______.

YOGA INSTRUCTORS WHO FIND WORK; EMPLOYERS AND UNEMPLOYED YOGA INSTRUCTORS INEFFICIENT AND NOT FAIR

At the shutdown​ point, the firm​ _______.

incurs a loss equal to total fixed cost


Ensembles d'études connexes

Google Analytics - Analytics Tracking Code

View Set

Essential Cell Biology - Chapter 15 Cell Biology

View Set

Unit II; Alterations in Patterns of Health; Chapter 5; Nursing Care of Clients Experiencing Loss, Grief, and Death

View Set