midterm 2

Refer to Table 13-10. The average variable cost of producing 240 units of output is

$0.38.

Refer to Table 13-10. The average total cost of producing 240 units is

$0.44.

Refer to Table 13-10. What is the marginal cost of producing 280 units of output?

$0.75

Refer to Figure 8-6. The tax results in a deadweight loss that amounts to

$1,800.

Katherine gives piano lessons for $15 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 $150 at the farmer's market. Katherine's accounting profits are

$100, and her economic profits are $25.

If Danielle sells 300 wrist bands for $0.50 each, her total revenues are

$150

Refer to Figure 8-6. When the government imposes the tax in this market, tax revenue is

$3,000.

Scenario 8-2 Roland mows Karla's lawn for $25. Roland's opportunity cost of mowing Karla's lawn is $20, and Karla's willingness to pay Roland to mow her lawn is $28. Refer to Scenario 8-2. If Karla hires Roland to mow her lawn, Karla's consumer surplus is

$3.

Gwen has decided to start her own photography studio. To purchase the necessary equipment, Gwen withdrew $2,000 from her savings account, which was earning 3% interest, and borrowed an additional $4,000 from the bank at an interest rate of 7%. What is Gwen's annual opportunity cost of the financial capital that has been invested in the business?

$340

Refer to Figure 8-6. When the tax is imposed in this market, producer surplus is

$600.

Refer to Figure 8-6. When the tax is imposed in this market, consumer surplus is

$900.

1 300 2 500 3 600 4 650 Refer to Table 13-2. What is the marginal product of the third worker?

100 units

Suppose a certain firm is able to produce 165 units of output per day when 15 workers are hired. The firm is able to produce 181 units of output per day when 16 workers are hired, holding other inputs fixed. The marginal product of the 16th worker is

16 units of output

Refer to Table 13-10. What is the marginal product of the fourth worker?

40 units

Refer to Figure 8-5. The total surplus with the tax is represented by area

A+B+D+F.

Scenario 8-2 Roland mows Karla's lawn for $25. Roland's opportunity cost of mowing Karla's lawn is $20, and Karla's willingness to pay Roland to mow her lawn is $28. Refer to Scenario 8-2. Assume Roland is required to pay a tax of $10 each time he mows a lawn. Which of the following results is most likely?

Karla now will decide to mow her own lawn, and Roland will decide it is no longer in his interest to mow Karla's lawn.

Variable cost divided by the change in quantity produced is

None of the above is correct.

Refer to Figure 13-10. The firm experiences diseconomies of scale if it changes its level of output from

Q4 to Q5.

Roland mows Karla's lawn for $25. Roland's opportunity cost of mowing Karla's lawn is $20, and Karla's willingness to pay Roland to mow her lawn is $28. Refer to Scenario 8-2. Assume Roland is required to pay a tax of $3 each time he mows a lawn. Which of the following results is most likely?

Roland and Karla still can engage in a mutually-agreeable trade.

What happens to the total surplus in a market when the government imposes a tax?

Total surplus decreases.

Suppose that the government imposes a tax of P3 - P1. Refer to Figure 8-5. The benefit to the government is measured by

tax revenue and is represented by area B+D.

Total revenue minus only explicit costs is called

accounting profit

Refer to Figure 13-5. Curve A represents which type of cost curve?

average fixed cost

Marginal cost is equal to average total cost when

average total cost is at its minimum

When a firm is experiencing economies of scale, long-run

average total cost is greater than long-run marginal cost.

When a tax is levied on a good,

both buyers and sellers are made worse off.

Total surplus with a tax is equal to

consumer surplus plus producer surplus plus tax revenue.

Refer to Figure 8-19. If the government changed the per-unit tax from $5.00 to $2.50, then the price paid by buyers would be $7.50, the price received by sellers would be $5, and the quantity sold in the market would be 1.5 units. Compared to the original tax rate, this lower tax rate would

decrease government revenue and decrease the deadweight loss from the tax.

Refer to Figure 13-10. The three average total cost curves on the diagram labeled ATC1, ATC2, and ATC3 most likely correspond to three different

factory sizes.

Which of the following costs do not vary with the amount of output a firm produces?

fixed costs

Assume that for good X the supply curve for a good is a typical, upward-sloping straight line, and the demand curve is a typical downward-sloping straight line. If the good is taxed, and the tax is doubled, the

height of the triangle that represents the deadweight loss doubles.

The marginal product of labor is equal to the

increase in output obtained from a one unit increase in labor

Refer to Figure 8-14. Which of the following combinations will maximize the deadweight loss from a tax?

inelastic supply 2 and demand 2and inelastic demand.

The deadweight loss from a tax of $2 per unit will be smallest in a market with

inelastic supply and inelastic demand.

Economies of scale occur when

long-run average total costs fall as output increases

Refer to Figure 13-2. As the number of workers increases,

marginal product decreases.

If the size of a tax increases, tax revenue

may increase, decrease, or remain the same

A production function is a relationship between inputs and

quantity of output.

When marginal cost is greater than average cost, average cost is

rising

The benefit that government receives from a tax is measured by

tax revenue.

Patrice owns a travel agency. Her accountant most likely includes which of the following costs on her financial statements?

the cost of utilities for operating the storefront