Econ Final

The firm experiences constant returns to scale at which output levels?

output levels between M and N

In the short-run, if the market price is higher than P4 but less than P6, individual firms in a competitive industry will earn

positive profits

When a monopolist is able to sell its product at different prices, it is engaging in

price discrimination

In the long-run, all of a firm's costs are variable. In this case the exit criterion for a profit-maximizing firm is to shut down if

price is less than average total costs

For a firm, the production function represents the relationship between

quantity of inputs and quantity of outputs

Suppose a firm in a competitive market reduces its output by 20%. As a result, the price of output is likely to

remain unchanged

At all levels of production higher than the point where the marginal cost curve crossed the average variable cost curve, average variable cost

rises

The average variable cost of producing 240 units of output is?

$0.38

If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

$1,000

Suppose a monopolist has a demand curve that can be expressed as P=90-Q. The monopolist's marginal revenue curve can be expressed as MR=90-2Q.

$1,600

Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the total profit if she operates at her profit-maximizing profit?

$11

A profit maximizing monopolist would create a deadweight loss to society valued at

$12

Suppose a firm in a competitive market produces and sells 150 units of output and earns $1,800 in total revenue from the sales. If the firm increases its output to 200 units, the average revenue fo the 200th unit will be

$12

Suppose Emily opens a restaurant. She receives a loan from a bank for $200,000, she withdraws $100,000 from her personal savings account. The interest rate on the loan is 6% and the interest rate on her savings account is 2%. Emily's explicit cost of capital is

$12,000

Julia prepares tax returns and does bookkeeping. Last year her revenues from tax and bookkeeping business were $150,000. 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. Julia's economic profits are

$125,000

for this firm, the marginal revenue is

$13

Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. Her annual expenses include $15,000 for office rent, $3,000f for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for her secretary. Ellie will cover her own start up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500. Ellie's annual economic costs will equal

$135,000

What is Vincent's total revenue on a typical day?

$2,170

What is the marginal revenue from selling the 8th pair of shoes?

$20

in order to maximize profits, the monopolist should charge a price of

$20

Assume a certain firm is producing Q=1,000 units of output. At Q=1,000 the firm's marginal cost equals $20 and its average total cost equals $25. The firm sells its output for $30 per unit. At Q=999, the firm's total cost equals

$24,980

A profit-maximizing monopolist would earn total revenues of

$240

The maximum profit this monopolist can earn is

$28

At Q=999, the firm's profit equals

$4,990

When Bob produces and sells the profit-maximizing quantity, how much profit does he earn?

$4.00

What is the average variable cost when output is 50 units?

$4.80

What is the total revenue from selling 4 units?

$480

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. At Q=499 the firm's total costs equal

$5,983

The Flying Elvis Copter Rides: What is the value of H?

$50

Suppose AVC=$113 when the firm produces 515 units of output. Then the firm's fixed cost amounts to

$6,180 and its profit amounts to $25,750

What is the marginal revenue from selling the 5th unit?

$80

What is the total revenue from selling 7 units?

$840

What is the marginal cost of the 8th pair of shoes?

$90

Which of the following statements is correct for both a monopolist and a perfectly competitive firm?

(I) and (iv) only

Which of the following is true of the production function (not pictured) that underlies this total cost function?

(I), (ii), and (iii)

Victor is the recipient of $1 million from a lawsuit. Victor decides to use the money to purchase a small business in Florida.

-$25,000

If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to maximize profit?

4 units

What is the marginal product for the fourth worker?

40 units

What is marginal product of the third worker??

60 units

Which of the curves is most likely to represent average fixed costs?

A

When market price is P2, a profit-maximizing firm's losses can be represented by the area

At a market price of P2, the firm earns profits, not losses

Which of the following is not a property of firm's cost curve?

Average total cost will cross marginal cost at the minimum of marginal cost

Which of the following statements is correct?

Economists consider opportunity costs to be included in a firm's cost of production

To maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where

MC intersects the demand curve

A profit maximizing monopoly's total cost is equal to

P5 x Q3

Which of the four prices corresponds to a firm earning negative economic profits in the short run and shutting down?

Pd

What is the shape of the monopolist's marginal revenue curve?

a down-ward sloping line that lies below the demand cuve

Which of the following would most likely to monopoly power?

a local cable TV provider

A firm that is the sole seller of a product without close substitute is

a monopolist

total revenue minus only explicit cost is called

accounting profit

Which of the following statements about a production function is correct for a firm that uses labor to produce output?

all of the above are correct

Suppose a firm in a competitive market, like the one depicted in panel (a), observes market price rising from P1 to P2.

an increase in market demand form DO to D1

Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced"?

average total costs

A fundamental source of monopoly market power arises from

barriers to entry

Which statement best describes the effect(s) that occur when a monopoly firm reduces the price of its product?

both a and b are correct

When market price is P3, a profit-maximizing firm's total costs

can be represented by area P3 x Q2

When there are economies of scale over the relevant range of output for a monopoly, the monopoly

is a natural monpoly

Cold Duck Airlines flies between Tacoma and Portland. The company leases planes on a year-long contract at a cost that averages $600 per flight. If it wants to maximize profit, Cold Duck Airlines should

continue flying until the lease expires and then drop the run

Mrs. Smith operates a business in a competitive market. The current market price is $8.10. At her profit-maximizing level of production... Mrs. Smith should

continue to operate in the short-run but shut down in the long run

Patent and copyright laws encourage

creative activity

The price effect describes the situation when a monopolist lowers the price of output and, all else equal, total revenue

decreases

if a firm in a competitive market doubles its number of units sold, total revenue for the firm will

double

Suppose that firm's long-run average total cost of producing televisions decreases as it produces between 10,000 and 20,000 televisions.

economies of scale

A production function describes

how a firm turns input to ouput

Which of the following statements is not correct?

if marginal cost is rising, then average variable cost must be rising

If a profit maximizing firm in a competitive market discovers that at its current level of production price is greater than marginal cost, it should

increase its output

If the monopoly firm is currently producing Q4 units of output, then a decrease in output will necessarily cause profit to

increases as long as the new level of output is atleast Q2

If Farmer Brown plants no seeds on his farm, he gets no harvest. FARMER BROWN

increasing

A firm that is a natural monopoly

is not likely to be concerned about new entrants eroding monopoly power

When price rises from P3 to P4, the firm finds that

it can earn a positive profit by increasing production to Q4

If a profit-maximizing monopolist faces a downward sloping market demand curve, its

marginal revenue is less than the price of the product

Consider a competitive market with a large number of identical firms. The firms in this market do not use any resources that are available only in limited quantities.

minimum point on the firms average total cost curve

Suppose ABC Aluminum Inc. owns 80% of the world's bauxite, a mineral used in the production of aluminum.

monopoly resources

Which of the following is the preferred strategy for the government to follow to remedy the inefficient allocation of resources associated with monopolies?

none of the above strategies is preferred. Each is a viable strategy

Curve D is increasing because

of diminishing marginal product

Jamar used to work as an office manager, earning $40,000 per year. He gave up that job to start a life coaching business, the $40,000 income that he gave up is counted as part of the life coaching business'

opportunity cost

When total revenue is less than variable costs, a firm in a competitive market will

shut down

Competitive firms that earn a loss in the short run should

shut down if P<AVC

When a firm experiences continually declining average total costs

society is better served by having one firm supply the product

When firms in a competitive market have different costs it is likely that

some firms will earn positive economic profits in long run

Phil sells duck calls in a perfectly competitive market.

some firms will exit from the market

When economists refer to a production cost that has already been committed and cannot be recovered they use the term

sunk cost

What is the area of deadweight loss?

the triangle 1/2 [(A-C)*(Y-X)]

the amount of money that a firm pays to buy inputs is called

total cost

If a firm operating in a competitive industry shuts down in the short run, it can avoid paying

variable costs