AP Microeconomics Unit 2

(Table 55-3 Costs of Producing Bagels) The total cost of producing two bagels is:

, $0.40

(Table 54-1: Labor and Output) Referring to the table, the average product when four workers are employed

E, 9.

(Figure 54-2 Change in Total Product) The figure shows a production function changing from TP1 to TP2. Based upon this change, what happened to the marginal product of the labor curve?

E, Marginal product has shifted upward and become steeper.

If marginal cost is greater than average total cost, then:

E, average variable cost is decreasing.

(Figure 55-2 Short-Run Costs) B is the ___ cost curve

A, Average Total.

If marginal cost is less than average total cost, then:

A, Average total cost is increasing.

Which of the following is true of the relationship between accounting profit and economic profit?

A, Economic profit is less than accounting profit if implicit costs exist.

If the marginal cost curve is upward sloping, this means that as output _____, marginal costs will:

A, Increase; Increase

A planning period during which all of a firm´s resources are variable in the

A, Long run.

The sum of fixed and variable costs is:

A, Total Cost.

(Figure 55-3 Short-Run Costs II) At six units of output, the average variable cost is approximate:

B, $120.

A farm can produce 1,000 bushels of wheat per year with two workers and 1,300 bushels of wheat per year with three workers. The marginal product of the third worker is

B, 300 Bushels.

An industry dominated by a few firms, where each firm recognizes that its own choices will affect the choices of its rivals and vice versa, is

B, An oligolopy.

Oligopolies are industries:

B, Made up of a few firms, each with some market power and therefore aware of their interference with the other firms.

If a local California avocado stand operates in a perfectly competitive market, that stand owner will be a:

B, Price Taker.

In the short run, as output gets larger and larger:

B, The average variable cost curve gets closer and closer to the average total cost curve.

The long-run average cost curve will be upward sloping when the firm is experiencing:

B. Diseconomies of scale.

Pauli¨s Pizza offers the following prices; one slice for $2, two slices for $3.50, three slices for $4.50, four slices for $5.00. Sal orders two slices. From this, we know that Sal¨s marginal benefit from the second slice must be at least_____, while the marginal benefit from the third must be less than______

C, $1.50;$1.00

If a firm produces 10 units of output and incurs $30 in average variable cost and $35 in average total cost, total fixed cost is:

C, $50

A total product curve indicates the relationship between

C, A variable input and output.

Control of a scarce resource or input, economies of scale, technological superiority, and government-created barriers are forms of

C, Barriers to entry.

What marginal cost is below average variable cost, average variable cost must be:

C, Falling.

Monopolistic competition is different from monopoly due to which one of the following features?

C, Firms face some competition.

The implicit cost of capital is

C, The opportunity cost of capital used by a business.

George owns a gun range in Texas. He pays $32,000 per year in insurance, $408,000 in wages, $23,000 in supplies, and he forgoes $32,000 per year he could make as a police officer. His total revenue last year equaled $460,000. This means his economic ____ equaled_____.

C, loses, $35,000.