Homework 3

Workers Marginal Product 0 0 1 30 2 45 3 60 4 50 5 40 Refer to Table above. What is total output when 4 workers are hired?

185

Suppose a firm in a competitive market earned $1,000 in total revenue and had a marginal revenue of $10 for the last unit produced and sold. What is the average revenue per unit, and how many units were sold?

$10 and 100 units

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 of the 200th unit will be:

$12

Billy's bean bag emporium produced 300 bean bag chairs but sold only 275 of the units it produced. The average cost of production for each unit of output produced was $100. The price for each of the 275 units sold was $95. Total profit for billy's Bean Bag Emporium is:

$3,875

Suppose that in a competitive market the equilibrium price is $2.50. What is marginal revenue for the last unit sold by the typical firm in this market?

exactly $2.50

When negative externalities are present the market produces a quantity that is __________ than the optimum.

greater

A cost imposed on someone who is neither the consumer nor the producer is called a:

negative externality

In a competitive market, buyers and sellers are

price takers

Firms operating in competitive markets produce output levels where marginal revenue equals:

price, average revenue, and total revenue divided by output

When negative externalities are present in a market:

social costs will be greater than private costs

A production function describes how a firm

turns inputs into output

Gwen has decided to start her own photography studio. To purchase the necessary equipment, Gwen withdrew $2,000 from her savings account, which was earning 3% interest, and borrowed an additional $4,000 from the bank at an interest rate of 7%. What is Gwen's annual opportunity cost of the financial capital that has been invested in the business?

$340

Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L = 12, Q = 122) and (L = 13, Q = 130). Then the marginal product of the 13th worker is:

8 units of output

Suppose that a firm operating in perfectly competitive market sells 200 units of output at a price of $3 each. Which of the following statements is correct? (i) Marginal revenue equals $3. (ii) Average revenue equals $600. (iii) Average revenue exceeds marginal revenue, but we don't know by how much.

(i) Marginal revenue equals $3

Workers Marginal Product 0 0 1 30 2 45 3 60 4 50 5 40 Refer to Table above. What is total output when 1 worker is hired?

30

The total cost to the firm of producing zero units of output is

its fixed cost in the short run and zero in the long run

For a firm in a competitive market, an increase in the quantity produced by the firm will result in

no change in the product's market price

When calculating a firm's profit, an economist will subtract only __________ from total revenue because ______________________.

opportunity costs; because this includes the implicit and explicit costs of the firm

The marginal product of labor can be defined as the change in:

output divided by the change in labor

__________ can be added to profit to obtain total revenue.

total cost