Econ 2302 Chapter 6 Quiz

Suppose Sarah owns a small company that makes wedding cakes. The accompanying table shows how Sarah's total cost varies depending on the number of wedding cakes she makes each day. Number of Cakes Per Day Total Cost Per Day 0 $100 1 $180 2 $220 3 $300 4 $400 5 $520 6 $660 If Sarah's fixed costs double, then in the short run, her profit-maximizing level of output:

will not change.

Total revenue minus both explicit and implicit costs defines a firm's

profit.

A fixed factor of production:

$100

The accompanying table shows a pizzeria's fixed cost and variable cost at different levels of output. Pizzas sell for $20 each. Number of Pizzas Per Day Fixed Cost ($/Day) Variable Cost ($/Day) 0 500 0 25 500 150 50 500 250 75 500 450 100 500 850 125 500 1,650 When the pizzeria makes 25 pizzas a day, its average fixed cost is ______.

$20

Average total cost is defined as:

total cost divided by total output.

A fixed factor of production:

NOT - is fixed in both the short run and the long run

Suppose Ben owns a small company that makes kites. The market for kites is perfectly competitive, and kites sell for $25 each. Ben's total production costs vary depending on the number of kites he makes each day, as shown in the accompanying table. Number of kites Per Day Total Cost Per Day ($) 0 100 1 110 2 126 3 148 4 172 5 200 6 235 When Ben makes 2 kites per day, what is his average variable cost?

$13

Refer to the accompanying figure. In this market, equilibrium price is ______ and equilibrium quantity is ______.

$25, 10

Refer to the accompanying table. To increase output from 33 to 66 units requires ______ extra employee(s) per day; to increase output from 66 to 99 units requires ______ extra employee(s) per day. Output Per Day Number of Employees Per Day 0 0 33 1 66 2 99 4 132 7 165 11

1; 2

Suppose Chris is a potter who makes mugs. His total costs depend on the number of mugs he makes each day, as shown in the accompanying table. Number of Mugs Per Day Total Cost Per Day 0 $10 1 $14 2 $19 3 $25 4 $32 5 $40 6 $49 Chris's fixed cost is ______ per day.

NOT $0

Last year, Casey grew fresh vegetables, which she sold at her local farmers market, but this year, Casey did not plant any vegetables and went to work at a bank instead. If Casey's decision to change careers did not affect the price of vegetables at the farmers market, then this suggests that:

NOT - the demand for vegetables did not change.

Which of the following is NOT a characteristic of a perfectly competitive market?

NOT Sellers can easily buy and sell the productive resources needed to enter the market.

As price increases, firms in a perfectly competitive market find that it is:

NOT: beneficial to produce fewer units of output

The accompanying table describes the relationship between the number of workers hired by a call center each hour and the number of calls the call center can make each hour. The call center has only 1 telephone. The telephone costs the firm $5/hour (regardless of how many calls are made), and each worker is paid $10 per hour. Calls Per Hour Number of Telephones Per Hour Number of Workers Per Hour 1 1 2 2 1 4 6 1 6 16 1 8 22 1 10 24 1 12 If the price of a telephone increases to from $5 to $10 an hour and nothing else changes, then:

Not - marginal cost would increase by $5 at every level of output.

If a perfectly competitive firm can sell each unit of output for $9, and the marginal cost of the last unit produced is $8.50, then the:

extra benefit of the last unit produced is greater than the extra cost.

The accompanying table shows a pizzeria's fixed cost and variable cost at different levels of output. Pizzas sell for $20 each. Number of Pizzas Per Day Fixed Cost ($/Day) Variable Cost ($/Day) 0 500 0 25 500 150 50 500 250 75 500 450 100 500 850 125 500 1,650 When the pizzeria makes 100 pizzas per day, it earns an economic ______ of ______.

profit; $650

Which of the following is NOT true of a perfectly competitive firm?

seeks to maximize revenue.

Suppose that when a perfectly competitive firm produces 1,000 units of output, its total variable cost is $1,900. If the marginal cost of producing the 1,000th unit is $1.70, and if the market price of each unit of output is $1.70, then the firm should:

shut down.

The accompanying graph shows the cost curves for Moe's mushroom gathering business, which is perfectly competitive. If mushrooms sell for $10 per bushel, and Moe chooses the profit-maximizing quantity, he will gather:

zero bushels

Suppose Ben owns a small company that makes kites. The market for kites is perfectly competitive, and kites sell for $25 each. Ben's total production costs vary depending on the number of kites he makes each day, as shown in the accompanying table. Number of kites Per Day Total Cost Per Day ($) 0 100 1 110 2 126 3 148 4 172 5 200 6 235 What is Ben's economic profit at his profit-maximizing level of output?

−$72