Econ Final
Goods that are rival in consumption include both
common resources and private goods
An externality is the uncompensated impact of
one person's actions on the well-being of a bystander
Refer to Figure 14-2. If the market price is $10, what is the firm's total revenue?
$50
Refer to Table 14-4. What is the total revenue from selling 4 units? P=$120
$480
Marcus sells 300 candy bars at $0.50 each. His total costs are $125. His profits are
$25
Refer to Table 13-10. What is the average fixed cost for the month if 9 instructional modules are produced?
120000
Scenario 15-1 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. Refer to Scenario 15-1. At Q = 500, the firm's profit is
13000
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. Other costs (fuel, flight attendants, etc.) amount to $550 per flight. Currently, Cold Duck's revenues are $1,000 per flight. All prices and costs are expected to continue at their present levels. If it wants to maximize profit, Cold Duck Airlines should
Continue flying until the lease expires and then drop the run. TC=600+550=1150 Revenue=1000 TC>Revenues
Refer to Scenario 13-3. Ziva's accountant would calculate the total cost for the day of farming to equal
EC= OC+AC 250+130= 380
Scenario 13-3 Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce. Refer to Scenario 13-3. Ziva's economic profit from farming equals
Economic profit = total revenue - total costs(explicit + implicit) total opportunity costs = 25*10 = 250 total explicit costs = 130 total revenue = 300 economic profit = 300-(250+130) = -80
Table 13-11 Quantity Long-Run Total Cost (Dollars) Firm A Firm B Firm C 1 100 100 100 2 100 200 300 3 100 300 600 4 100 400 1,000 5 100 500 1,500 Refer to Table 13-11. Which firm is experiencing diseconomies of scale?
Firm C Only
When profit-maximizing firms in competitive markets are earning profits,
New firms will enter the market
Which of the following is usually true about government-provided goods?
People do not have to pay an explicit fee to enjoy these goods.
Brady Industries has average variable costs of $1 and average total costs of $3 when it produces 500 units of output. The firm's total fixed costs equal
Total fixed cost=(ATC-AVC)*Q=(3-1)*500=$1000the total fixed cost is $1000 at all level of output
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
Total revenue = P* x Q* = 6 x 800 =$4800. Total costs = Average cost x Output produced. = 4 x 800. So, Total cost = $3200. Profit of a firm = Total revenue - Total costs. = 4800-3200= So, profit = $1600
Which of the following is an example of public ownership of a monopoly?
USPS
Refer to Figure 14-3. In the short run, if the market price is P4, individual firms in a competitive industry will earn
Zero profits
If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then
a one-unit increase in output will increase the firm's profit.
When marginal cost is less than average total cost,
average total cost is failing
If the government were to limit the release of air pollution produced by a glue factory to 75 parts per million, the policy would be considered a
command and control policy
When a firm operates under conditions of monopoly, its price is
constrained by demand
If a monopolist is able to perfectly price discriminate,
consumer surplus and deadweight losses are transformed into monopoly profits.
Monopolies are socially inefficient because the price they charge is
equal to marginal revenue
The failure of markets to adequately protect the environment can be viewed either as a problem of
externalities or as a problem of common resources
The minimum points of the average variable cost and average total cost curves occur where the
marginal cost curve intersects those curves.
If a firm in a perfectly competitive market triples the quantity of output sold, then total revenue will
more than triple
If a road is congested, then use of that road by an additional person would lead to a
negative externality
A key characteristic of a competitive market is that
producers sell nearly identical products.
The deadweight loss associated with a monopoly occurs because the monopolist
produces an output level less than the socially optimal level.
Price discrimination is the business practice of
selling the same good at different prices to different customers.
For a long while, electricity producers were thought to be a classic example of a natural monopoly. People held this view because
the average cost of producing units of electricity by one producer in a specific region was lower than if the same quantity were produced by two or more producers in the same region.
One problem with government operation of monopolies is that
the government has little incentives to reduce costs
If a firm uses labor to produce output, the firm's production function depicts the relationship between
the number of workers and the quantity of output
Price discrimination is a rational strategy for a profit-maximizing monopolist when
there is no opportunity for arbitrage across market segments.
A cost-benefit analysis of a highway is difficult to conduct because analysts
will have difficulty estimating the value of the highway.