Quiz #6

14.Assume a firm in a competitive industry is producing 800 units of output, and it sells each unit for $6. Its average total cost is $4. Its profit is a.$-1,600. b.$1,600. c.$3,200. d.$8,000

B

2. Marcia is a fashion designer who runs a small clothing business in a competitive industry. Marcia specializes in making designer dresses. Marcia sells 10 dresses per month. Her monthly total revenue is $5,000. The marginal cost of making a dress is $600. In order to maximize profits, Marcia should a.make more than 10 dresses per month. b.make fewer than 10 dresses per month. c.continue to make 10 dresses per month. d.We do not have enough information with which to answer the question.

B

5.Refer to Table 14-14.What is the marginal revenue of the 4th unit? a.$2.00 b.$3.25 c.$10.00 d.$13.00

B

6.Refer to Table 14-14.At what quantity will Bob maximize his profit? a.5 units b.6 units c.7 units d.8 units

B

9.Refer to Table 14-14.Suppose that due to a decrease in the market demand for bread the market price of bread drops to $2.75. At this new price, if Bob produces and sells the profit-maximizing quantity, how much profit will he earn? a.$0.25 b.$1.25 c.$2.25 d.The firm will lose $6.25.

B

Suppose a certain competitive firm is producing Q=500 units of output. The marginal cost of the 500th unit is $17, and the average total cost of producing 500 units is $12. The firm sells its output for $20. 10.Refer to Scenario 14-3.At Q=500, the firm's profits equal a.$1,000. b.$4,000. c.$7,000. d.$10,000.

B

4.Refer to Table 14-14.What is the total revenue from selling 5 units? a.$2.50 b.$3.25 c.$12.50 d.$16.25

D

1.For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $10 and a marginal cost of $7. It follows that the a.production of the 100th unit of output increases the firm's profit by $3 .b.production of the 100th unit of output increases the firm's average total cost by $7. c.firm's profit-maximizing level of output is less than 100 units. d.production of the 99th unit of output must increase the firm's profit by less than $3

A

11.Refer to Scenario 14-3.At Q=499, the firm's total costs equal a.$5,983. b.$5,988. c.$5,995. d.$5,999

A

16.Refer to Table 17-8. Ifthere were only one supplier of water, what would be the price and quantity? a.The price would be $7 per gallon and the quantity would be 600 gallons. b.The price would be $6 per gallon and the quantity would be 800 gallons. c.The price would be $5 per gallon and the quantity would be 1000 gallons. d.The price would be $4 per gallon and the quantity would be 1200 gallons

A

17.Refer to Table 17-8. If there are two suppliers of water, Victor and Sami, and if they have successfully formed a cartel, then what would be the price and the market quantity? a.The price would be $7 per bottle and the market quantity would be 600 bottles. b.The price would be $6 per bottle and the market quantity would be 800 bottles. c.The price would be $5 per bottle and the market quantity would be 1000 bottles. d.The price would be $4 per bottle and the market quantity would be 1200 bottles

A

20.Competitive firms that earn a loss in the short run should a.shut down if P < AVC. b.raise their price. c.lower their output. d.All of the above are correct

A

8.Refer to Table 14-14.Suppose that due to a decrease in the market demand for bread the market price of bread drops to $2.75 per loaf. At this new price, what is Bob's profit-maximizing quantity? a.5 units b.6 units c.7 units d.8 units

A

12.Refer to Scenario 14-3.At Q=499, the firm's profits equal a.$3,980. b.$3,992. c.$3,997. d.$4,017

C

13.Refer to Scenario 14-3.If the marginal cost of producing the 501st unit would be $19, producing and selling the 501st unit would a.decrease the firm's profit by $19. b.decrease the firm's profit by $2. c.increase the firm's profit by $1. d.increase the firm's profit by $3.

C

15.Refer to Table 17-8. If there were many suppliers of bottled water, what would be the price and quantity? a.The price would be $6 per gallon and the quantity would be 800 gallons .b.The price would be $5 per gallon and the quantity would be 1000 gallons. c.The price would be $4 per gallon and the quantity would be 1200 gallons. d.The price would be $3 per gallon and the quantity would be 1400 gallons.

C

18.Refer to Table 17-8. If there are two suppliers of water, Victor and Sami, and if they have successfully formed a cartel and split the market evenly, then how many bottles will Sami supply? a.100 b.200 c.300 d.400

C

19.Susan quit her job as a teacher, which paid her $36,000 per year, in order to start her own catering business. She spent $12,000 of her savings, which had been earning 10 percent interest per year, on equipment for her business. She also borrowed $12,000 from her bank at 10 percent interest, which she also spent on equipment. For the past several months she has spent $1,000 per month on ingredients and other variable costs. Also for the past several months she has taken in $3,500 in monthly revenue .a.In the short run, Susan should shut down her business, and in the long run she should exit the industry. b.In the short run, Susan should continue to operate her business, but in the long run she should exit the industry. c.In the short run, Susan should continue to operate her business, but in the long run she will probably face competition from newly entering firms. d.In the short run, Susan should continue to operate her business, and she is also in long-run equilibrium.

C

3.Refer to Table 14-14.What is Bob's total fixed cost? a.$0 b.$3 c.$5 d.$9

C

7.Refer to Table 14-14.When Bob produces and sells the profit-maximizing quantity, how much profit does he earn? a.$0.25 b.$2.75 c.$4.00 d.$5.25

C