Micro 102 final exam

A monopolist's supply curve is vertical

Falss

Total revenue minus only explicit costs is called

accounting profit

Assume a certain firm in a competitive market is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit. At Q = 999, the firm's profits equal

$10,985

Doreen's dairy produces and sells Swiss cheese. Last year it produced 7,000 pounds and sold each pound for $6. In producing the 7,000 pounds, the dairy incurred variable costs of $28,000 and a total cost of $40,000

$2,000

The Wacky Widget company has total fixed costs of $100,000 per year. The firm's average variable cost is $10 for 10,000 widgets. At that level of output, the firm's average total costs equal

$20

The three amigos company produced and sold 500 dog beds. The average cost of production per dog bed was $50. Each dog be sold for a price of $65. The three amigos total cost are

$25,000

A monopolist can sell 300 units of output for $50 per unit. Alternatively, it can sell 301 units of output for $49.60 per unit. The marginal revenue of the 301st unit of output is

-$70.40.

Which of the following is NOT an example of price discrimination

A bakery charges a higher price for brownies than for cookies.

Which of the following is NOT an example of a barrier to entry

An entrepreneur opens a popular new hair salon

Which of the following statements is not correct?

Average fixed costs are constant.

In the long run, a firm will exit a competitive industry if

Average total cost exceeds the price

Wanda owns a lemonade stand. She produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. Her costs per glass are as follows: $0.01 for water, $0.02 for sugar, $0.03 for lemons, $0.02 for cups, and $0.10 for the opportunity cost of her labor. She can sell 300 glasses for $0.50 each. What are Wanda's total economic profits? a. $150 b. $126 c. $96 d. $24

C. $96

In the long run,

Competitive firms' profits are zero

Assume a certain firm in a competitive market is producing Q=1,000 units of output at Q= 1000, the firms marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit

Decrease its output but continue to produce

Suppose that for a particular business there are no implicit costs. Then

accounting profit will be the same as economic profit.

Tony's taco truck has an average variable cost of $1.50 and a marginal cost of $1.50 and a marginal cost of $2 when it produces 50 units of output (Tacos). We can conclude that the average variable cost of producing 51 tacos is

Higher than $1.50

Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA). Johnny's cumulative GPA will fall even further next semester if he performs worse than (i) his cumulative GPA. (ii) he ever performed before. (iii) he did last semester.

I and II only

Bubba is a shrimp fisherman who could earn $5000 as a fishing tour guide. Instead he is a full time shrimp fisherman. In calculating the economic profit of his shrimp business, the $5000 that bubba gave up is counted as part of the shrimp business'

Implicit costs

In a competitive market the current price is $5. The typical firm in the market has ATC= $5.50 and AVC= $5.15

In the short run firms will shut down, and in the long run firms will leave the market

The minimum points of the average variable cost and average total cost curve occur where the

Marginal cost curve intersects those curves

If firms are competitive and profit maximizing, the price of a good equals the

Marginal cost of production

Jamarr used to work as an office manager, earning $40,000 per year. He gave up that job to start a life coaching business. In calculating the economic profit of his life-coaching business, the $40,000 income that he gave up is counted as part of the life-coaching business's

Opportunity costs

Suppose a monopolist is able to charge each customer a piece equal to that customers willingness to pay for the product. Then the monopolist is engaging in

Perfect price discrimination

A key characteristic of a competitive market is that

Producers sell nearly identical products

Which of these types can be ignored when an individual or a firm is making decisions

Sunk costs

Which of the following is an example of public ownership of a monopoly?

U.S. Postal Service

You purchase a $30, nonrefundable ticket to a play at a local theater. Ten minutes into the show you realize that it is not a very good show and place only a $10 value on seeing the remainder of the show. Alternatively you could leave the theater and go home and watch TV or read a book. You place an $8 value on watching TV and a $12 value on reading a book.

You should go home and read a book.

Which of the following would be most likely to have monopoly power

a local cable TV provider

If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then

a one-unit increase in output will increase the firm's profit.

The amount of money that a wheat farmer could have earned if he had planted barley instead of wheat is

an implicit cost

Which of the following expressions is correct?

average total cost = (total cost)/(quantity of output)

When a firm has a natural monopoly, the firm's

average total cost curve is downward sloping

When marginal cost is less than average total cost,

average total cost is falling

Variable cost divided by quantity produced is

average variable cost

The fundamental source of monopoly power is

barriers to entry

A firm that has little ability to influence market prices operates in a

competitive market

If a monopolist is able to perfectly price discriminate

consumer surplus and deadweight losses are transformed into monopoly profits.

The social cost of a monopoly is equal to its

dead weight loss

A benefit to society of the patent and copyright laws is that those laws

encourage creative activity

Total cost can be divided into two types of costs:

fixed costs and variable costs

Which of the following would be an example of an implicit cost

forgone investment opportunities

As a general rule, when accountants calculate profit they account for explicit costs but usually ignore

implicit costs

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

output divided by the change in labor

In the short run, a firm operating in a competitive industry will produce the quantity of output where price equals marginal cost as long as the

price is greater than average variable cost

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

price, average revenue, and total revenue divided by output all of the above

Which of these curves is the competitive firm's short-run supply curve?

the marginal cost curve above average variable cost