econ 110 3

Suppose that in a competitive market the equilibrium price is $2.50. What is marginal revenue for the last unit sold by the typical firm in this market?

c. exactly $2.50

An example of an explicit cost of production would be the

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

When a firm experiences diseconomies of scale,

c. long-run average total cost increases as output increases.

If Tanya sells 200 glasses of fruit punch at $0.50 each, her total revenues are

a. $100.

Refer to Figure 13-3. Which of the following statements best captures the nature of the underlying production function (not pictured)?

a. Output increases at a decreasing rate with additional units of input.

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

a. Q1 to Q2.

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

a. Q1 to Q2.

The average fixed cost curve

a. always declines with increased levels of output.

Which of the following expressions is correct?

accounting profit = total revenue - explicit costs

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 176 units of output per day when 16 workers are hired, holding other inputs fixed. The marginal product of the 16th worker is

b. 11 units of output.

When marginal cost exceeds average total cost,

b. average total cost must be rising.

When a firm's long-run average total costs do not vary as output increases, the firm exhibits

b. constant returns to scale.

Mrs. Smith operates a business in a competitive market. The current market price is $8.10. At her profit-maximizing level of production, the average variable cost is $8.00, and the average total cost is $8.25. Mrs. Smith should

b. continue to operate in the short run but shut down in the long run.

Economies of scale occur when

b. long-run average total costs fall as output increases.

Suppose that a firm has only one variable input, labor, and firm output is zero when labor is zero. When the firm hires 6 workers the firm produces 90 units of output. Fixed costs of production are $6 and the variable cost per unit of labor is $10. The marginal product of the seventh unit of labor is 4. Given this information, what is the average total cost of production when the firm hires 7 workers?

c. 81 cents

A market is competitive if (i) firms have the flexibility to price their own product. (ii) each buyer is small compared to the market. (iii) each seller is small compared to the market.

c. (ii) and (iii) only

Refer to Figure 13-8. Quantity C represents the output level where the firm

c. produces at the efficient scale.

Fixed costs can be defined as costs that

d. are incurred even if nothing is produced.

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

d. factory sizes.

The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which

d. profit is maximized.