Micro Test Final

The cost of producing an additional unit of a good is not the same as the average cost of the good.

true

oligopoly and monopolistic competition are examples of a market structure called imperfect competition

true

The average variable cost of producing 240 units is

$0.19

what is the fixed cost of production for this firm?

$10

Consider a firm operating in a competitive market. The firm is producing 40 units of output, has an average total cost of production equal to $5, and is earning $240 economic profit in the short run. What is the current market price?

$11

what is the value of P?

$140

A production function is a relationship between inputs and

quantity of output

Barney builds custom wooden birdhouses. He can make 150 birdhouses per month and sell them for $50 each. His average total cost is $30 per birdhouse. Barneys monthly total profit is

$3000

If the monopoly firm is not allowed to price discriminate, then the deadweight loss amounts to

1000

Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100,000. He withdraws $50,000 from his personal savings account. The interest rate on the loan is 8%, and the interest rate on his savings account is 2%. Abdul annual implicit cost of capital is

1000

Tom's Tent Company has total fixed costs of $300,000 per year. The firm's average variable cost is $80 for 10,000 tents. At that level of output, the firm's average total costs equal

110

What is the marginal cost of the 8th unit?

120

Kachina is a senior majoring in graphic design at Awesome University (AU). While she has been attending college, Kachina started a computer consulting business to help senior citizens learn how to use their iPads. Kachina charges $25 per hour for her consulting services. She also works 5 hours a week for the Economics Department to maintain that department's Web page. The Economics Department pays Kachina $20 per hour. Refer to Scenario 13-3. If Kachina can work additional hours at either job, what is the opportunity cost if she spends one hour reading a novel?

25

How much output will the monopolist produce?

W

in a two person repeated game, a tit for tat strategy starts with

cooperation and then each player mimics the other players last move

Which of the following is not an example of a barrier to entry?

a college student starts a part time tutoring business

Let Q represent the quantity of output for a perfectly competitive firm and suppose the price of the good is $125. Then marginal revenue is $125 at

all of the above Q=270, 515, 322

Piper consumes Ragu spaghetti sauce exclusively. She claims that there is a clear taste difference and that competing brands of spaghetti sauce leave an unsavory taste in her mouth. However, in a blind taste test, Piper is found to prefer generic store-brand spaghetti sauce to Ragu spaghetti sauce eight out of ten times. The results of Piper's taste test would reinforce claims by critics of brand names that

brand names cause consumers to perceive differences that do not really exist

If the total cost curve gets steeper as output increases, the firm is experiencing

diminishing marginal product

the oligopoly price will be greater than marginal cost but less than the monopoly price when

each oligopolist individually chooses a quantity to produce to maximize profit

a profit maximizing firm in a monopolistically competitive market differs from a firm in a perfectly competitive market because the firm in the monopolistically competitive market...

faces a downward-sloping demand curve for its product

At the profit maximizing quantity of output for a monopolist average revenue, marginal revenue and price are all equal

false

a monopoly creates a deadweight loss to society because it earns both short run and long run positive economic profits

false

one way that public policy encourages cooperation among oligopolists is the antitrust law

false

A firm has market power if it can

influence the market price of the good it sells

If a social planner were running a monopoly, that planner could achieve an efficient outcome by charging the price that is determined by the

intersection of marginal cost curve and the demand curve

A firm cannot price discriminate if

it operates in a competitive market

Quantity B represents the output level where the firm

minimizes average variable costs

suppose that a firm in a competitive market has the following cost curves: if the market price is $5, the firm will earn

negative economic profits in the sort run but remain in business

in a perfectly competitive market

no one seller can influence the price of the product

If a competitive firm is currently producing a level of output at which is not maximized, then it must be true that

none of the above

economic profit is equal to total revenue minus the

opportunity cost of producing goods and service

which of the graphs illustrates a relatively elastic, though not perfectly elastic, demand curve consistent with a market that has many substitute products

panel B

If there is an increase in market demand in a perfectly competitive market, then in the short run

profits will rise

The wooden chair factory experiences diminishing marginal product of labor with the addition of which worker

sixth

A firm in a competitive market is currently producing 100 units of output per day. The manager reports to the owner that producing the 100th unit costs the firm $5. The firm can sell the unit for $6. The firm should produce more than 100 units in order to maximize its profits (or minimize its losses)

true

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

true

Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output.

true

In order for a firm to maximize profits through price discrimination, the firm must have some market power and be able to prevent the resale of the good

true

what is the value of K?

$110

Julia prepares tax returns and does bookkeeping. Last year her revenues from the tax and bookkeeping business were $150,000, and her expenses for the business were $15,000. When she started her tax and bookkeeping business, Julia gave up her supplemental job doing in-home pet sitting. She used to earn $10,000 per year from pet sitting. Assume that she incurred no costs for her pet sitting business. Julia's explicit costs are

$15,000

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. assume the number of machines does not change. if the factory produces a rate of 78 chairs per hour, what is the total machine cost per day?

$40

Assume that a local restaurant sells two items, salads and steaks. The restaurant's only two customers on a particular day are Mr. Carnivore and Ms. Leafygreens. Mr. Carnivore is willing to pay $20 for a steak and $7 for a salad. Ms. Leafygreens is willing to pay only $8 for a steak, but is willing to pay $12 for a salad. Assume that the restaurant can provide each of these items at zero marginal cost. Refer to Scenario 17-5. How much additional profit can the restaurant earn by switching to the use of a tying strategy to price salads and steaks rather than pricing these goods separately?

$5

The concert promoters of a heavy-metal band, WeR2Loud, know that there are two types of concert-goers: die-hard fans and casual fans. For a particular WeR2Loud concert, there are 1,000 die-hard fans who will pay $150 for a ticket and 500 casual fans who will pay $50 for a ticket. There are 1,500 seats available at the concert venue. Suppose the cost of putting on the concert is $50,000, which includes the cost of the band, lighting, security, etc. Refer to Scenario 15-6. How much profit will the concert promoters earn if they set the price of each ticket at $50?

25000

Suppose you bought a ticket to a football game for $30 and that you place a $35 value on seeing the game. If you lose the ticket, then what is the maximum price you should pay for another ticket? Assume that losing the ticket does not alter how you value it.

35$

When a profit-maximizing firm in a monopolistically competitive market is producing the long-run equilibrium quantity,

its demand curve will be tangent to its average total cost curve

By comparing marginal revenue and marginal cost, a firm in a competitive market is able to adjust production to the level that achieves its objective, which we assume to be

maximizing profit

marginal revenue can become negative for

monopoly firms but not for competitive firms

When a firm experiences continually declining average total costs, the firm is a

natural monopoly

When some resources used in production are only available in limited quantities, it is likely that the long run supply curve in a competitive market is

upward sloping