Econ Ex3
Charles has decided to open a lawn mowing company. To do so, he purchases mowing equipment for 6k, spends 525 on gas, and pays a part time worker 2500. Prior to opening the lawn mowing company. Charles earned 4k as a lifeguard at the neighborhood swimming pool. If charles had invested the money instead of starting the lawn mowing company, he would have earned 270 in interest. What are charles implicit cost of production?
$4270
Suppose that the price of a bushel of wheat is 7$ and that the market is perfectly competitive. What are the farmers total revenues if 7 bushels of wheat are sold?
$49
What is the average total cost when four workers are hired?
$560
Suppose a pizza parlor has the following production costs 4$ in labor per pizza, 3$ in ingredients per pizza, .40$ in electricity per pizza, 2000$ in restaurant rent per month, and $450 in insurance per month. Assume the pizza parlor produces 1,000 pizzas in a month. What is the total variable cost to produce the 1,000 pizzas?
$7,400
An implicit cost is
A non-monetary opportunity cost
Suppose that the price of a bushel of wheat is 7$ and that the market is perfectly competitive. What is the marginal revenue of the fourth bushel of wheat?
7
What is the total fixed cost when three workers are hired?
8000
Suppose the price of a bushel of wheat is 7$ and that the market is perfectly competitive. What is the profit maximizing quantity of wheat that the farmer will see?
9
Unlike in perfectly competitive markets, in monopolistically competitive markets
Firms face downward-sloping demand curves and the products competitors sell are differentiated
Figure 5 shows a firm in a monopolistically competitive market. What is the firm's profit maximising quantity?
Q2
Based on the info in table 5, how many loaves of ciabatta bread should maria sell?
5
What is the marginal product of labor of the second worker?
10
What is the firm's profit maximising output level?
1350
If the market price is 25$ in a perfect competitive market, then the marginal revenue of selling the fifth unit is
25$
Based on the info in table 5, what price should markia charge?
3.50$
Suppose that the price of a bushel of wheat is 7$ and that the market is perfectly competitive. What are the farmers profits if 8 bushels of wheat are sold?
30.50
A price taker is
A firm that is unable to affect the marketing price
What is the relationship between a perfectly competitive firms marginal cost curve and its supply curve
A firm's marginal cost curve is equal to its supply curve for prices above variable cost
The law of eventually diminishing returns states that:
Adding more of a variable input to the same amount of a fixed input will eventually cause the marginal product of the variable input to decline
Which of the following is an example of a monopoly?
Alabama power (electricity company in tuscaloosa)
A characteristic of the long run is
All inputs can be varied
How are implicit costs different from explicit costs
An explicit cost is a cost that involves spending money while implicit cost is a non monetary cost
The shutdown point for an individual firm occurs
At the minimum of the average variable cost curve
A monopolistically competitive firm is not productively efficient because it produces at an output level where
Average total cost is not at a minimum
Given the information regarding bills automobile collision repair shop, which of the following statements is true?
Bills firm is operating in the short run
Which of the following is most likely to be a variable cost for a business firm?
Cost of shipping products
As the level of output increases, the difference between the average total cost and average variable cost
Decreases because average fixed cost decreases as output increases
The entry of new firms cause the demand curve for an existing firm in monopolistically competitive market to shift the left because________ and become more elastic since_____.
Each will have a smaller share of the existing market, consumers will have additional choices
When are firms likely to enter an industry? when are they likely to exit?
Economic profits attract firms to enter an industry, and economic losses cause firms to exit an industry
Any cost that remains unchanged as output changes represents a firm
Fixed cost
What is the difference between the short run and the long run
In the short run at least one of the firm's inputs is fixed, while in the long run, a firm is able to vary all its inputs and adopt new technology
For a market to be perfectly competitive , there must be:
Many buyers and sellers, with firms selling identical products, and no barriers to new firms entering the market
The more cell phones in use, the more valuable they become to consumers. This is an example of:
Network externalities
What type of market has a few sellers?
Oligopoly
Figure 5 shows a firm in a monopolistically competitive market. What is the firm's profit maximizing price?
P4
If the market price is $20 and the firm is producing at the profit maximising output level, what is the amount of the firm's profit or loss?
Profit of $6750
Figure 5 shows a firm in a monopolistically competitive market. The figure depicts a firm
That is that is at the long run equilibrium
The marginal product of labor is
The additional output that results when one more worker is hired, holding all other resources constant
The four main reasons a firm becomes a monopoly are
The government can block entry, control a key resource, network externalities, and economies of scale
The production function is the relationship between
The inputs employed by a firm and the max output it can produce with those inputs
When maximizing profits, MR=MC is equivalent to P=MC because:
The marginal revenue curve for a perfectly competitive firm is the same as its demand curve
Why are firms willing to accept losses in the short run but not in the long run?
There are fixed costs in the short run but not in the long run
How are profits calculated?
Total revenues minus total costs
The marginal cost curve intersects the average variable cost curve at the level of output where average variable cost is a minimum because:
When the marginal cost of the last unit produced is below the average, it pulls the average down. And when the marginal cost is above the average, it pulls the average up
Why do single firms in perfectly competitive markets face horizontal demand curves?
With many firms selling an identical product, single firms have no effect on market price