micro 2

Gennaro is a blogger living Italy who could work for la Republlica (newspaper) as food critic for $50,000 a year but instead runs the blogging business online through advertising, making revenues of $80,000 a year. His businness expenses are $2,000 for supplies and $18,000 rent for office space. What is Gennaros economic profit from working as a freelance writer?

$10,000

beatrice wants to calculate the accounting and economic profit of her farm in Kansas. she pays $30,000 year in overhead, $80,000 in wages, and $20,000 in insurance. She forgoes $30,000 per year that she could make as a vehicle inspector for DMV. If her total rev = $140,000, her accounting profit is ____ and econ profit is _____.

$10,000 and $-20,000

table below marginal benefit of producing 4th sweater is

$13

marginal cost of producing a 2nd handbag is :

$20

state of texas recently saw a gas price increase by 5%, which brought about a fall in quantity of gasoline purhcased by 1%. the price elasticity of demand is equal to __ and demand is described as ____

0.2 , inelastic

if the price of a good increases by 10% and the equity demanded changes by 15% then price elasticity of demand is equal to

1.5

u of neb (Tr decreases , lowered price and revenue goes down means demand in inelastic)

Answer : C

economic profit

B) 2000 41000-2000-12000-25000=2000 27000 is accounting profit

total cost - variable cost = fixed cost

C) 2.43 45000-28000=17000 AFC at quantity of 7000 Fixed Coat / Quantity = 17000/7000 = 2.43

when marginal cost is rising, AVC

C) could be rising or falling

the long run is distinguished from the short run in that

C) the quantities of all inputs can vary (no fixed costs in long run)

amount of tax is $2

D) $2 deadweight loss due to its tax is : 1/2 x 2 x 1000 = 1000 A) 1000 3 is price demanders pay 1 is price suppliers pay

the Marginal cost curve intersects

D) ATC and AVC curves at their minimum points

$5 excise tax on suppliers, the price of leather shoes will

D) increase, but we cannot determine how much Price increases from equlibrium to new price

perfectly competitive firm means

D) infinite elasticity (perfect elastic)

income that she gave up is :

D) opportunity cost or implicit costs

Firm will shut down if price falls below :

P2 P2 bc if price falls below AVC curve wont have enough $ to pay workers

Oil prod nations are fully aware that price elasticity of demand for gasoline in the short run is approx 0.4. If a war in Middle East causes price of oil (from which gas is made) to increase, how will that affect total revenue from gasoline production in the short run, all other things equal?

Quantity Dem - Decrease Total Rev - Increase

Average Variable Cost

answer : C AFC always downward slope (D) MC intersects AVC and ATC at their minimum (curve A) ATC (curve B)

in the short run

at least 1 input is fixed

to be binding, a price ceiling must be set at a price ___ the equilibrium price.

below

table

cost of factory is fixed cost so all 150 cost of workers -1 is 275, 2* 275=550 for 2 workers etc total cost = fixed cost + variable boxes of choc produced per week : 0, 330, 630, 780, 890, 950, 960 marginal product of labor is difference in quantity when adding each worker : 330, 300, 150, 110, 60, 10

total cost curve gets steeper as output increases due to

diminishing marginal product

the eventual increase in AVC as output increases is the _____ effect

diminishing returns

suppose the price elasticity of demand for a bacon double cheeseburger is 3.67. This means demand for cheeseburger is

elastic

the change in total revenue resulting in a change from point P to T suggest that demand is

elastic

Jims mens tie store sold an average of 30 ties per day at $5 per tie but sold 50 of same ties for $3 per tie. the price elasticity of demand obtained by using midpoint method is

equal to 1

Price ___ and profit of each existing firm ___

falls and falls

NC State Univ recently raised its tuition by 12%. A survey was then conducted to determine how many students would transfer to another university as a result. It was found that only about 1 in 300 responses indicated they would transfer. based on the info, price elasticity of demand for education at this univ is :

highly inelastic

as part of get fit program.. we expect consumers to pay almost all of this tax if demand is _____ and supply is _______

inelastic ; inelastic

if 2 goods are complements their cross price elasticity of demand is

negative

when the marginal benefit of an activity is less than the marginal cost of the activity, the decision maker should do _____ of the activity

none

price of elasticity of demand measures the responsiveness of a change in

quantity demanded to a change in the price of a good

change in QD/ change in PD

same in philly and dover (3 and 3)

if government imposes a price ceiling of $2.50 per bottle of kombucha there will be

shortage of 3 bottles

when firms increase their output while fixed costs remain unchanged, the fixed cost is divided by larger quantities of output, and the average fixed cost fails. this is referred to as the ___ effect.

spread effect

market for milk, if govt price floor of $1.30 is imposed on market, inefficiency will result in the form of a ______ of ______ galloons of milk.

surplus ; 6.0

it is efficient to produce an additional shirt if :

the marginal benefit of producing shirt is greater than marginal cost of producing it

if a rent ceiling is set at $1100

the shortage of rental units will be the distance between 2.1m - 1.9m or 0.2 mill units

The incidence of a tax

who really bears the burden of a tax