micro exam 3

Entry into a market by new firms will increase the

. supply of the good.

Shelley's Salsa produces and sells organic salsa. Last year it sold 3 million tubs of salsa at a price of $3 per tub. For last year, the firm's

. total revenue was $9 million.

Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. Together Kate and William can arrange 35 bouquets per day. What is William's marginal product?

15 bouquets

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

Marcus sells 300 candy bars at $0.50 each. His total costs are $125. His profits are

$25.

Which of the following expressions is correct?

accounting profit = total revenue - explicit costs

Bubba is a shrimp fisherman who catches 4,000 pounds of shrimp per year. He can sell the shrimp for $5 per pound. His average total cost of catching shrimp is $3 per pound. Bubba's annual total profit is

$8,000.

Pete owns a shoe-shine business. Which of the following costs would be implicit costs? (i) shoe polish (ii) rent on the shoe stand (iii) wages Pete could earn delivering newspapers (iv) interest that Pete's money was earning before he spent his savings to set up the shoeshine business

(iii) and (iv) only

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.90 per unit. The marginal revenue of the 151st unit of output is

-$5.10

Assume, for Japan, that the domestic price of automobiles without international trade is lower than the world price of automobiles. This suggests that, in the production of automobiles,

Japan has a comparative advantage over other countries and Japan will export automobiles.

. When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent

a transfer of benefits from the consumer to the producer.

. Which of the following is an example of a barrier to entry?

Roseanne obtains a copyright for a short story that she wrote and published.

Suppose Russia exports sunflower seeds to Ireland and imports coffee from Brazil. This situation suggests

Russia has a comparative advantage over Ireland in producing sunflower seeds, and Brazil has a comparative advantage over Russia in producing coffee

Which of the following statements is not correct?

To maximize profit, firms should produce at a level of output where price equals average variable cost.

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 fundamental source of monopoly power is

barriers to entry.

When a country allows trade and becomes an importer of a good

domestic producers become worse off, and domestic consumers become better off.

For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $7 and a marginal cost of $10. It follows that the

firm's profit-maximizing level of output is less than 100 units.

Total cost can be divided into two types of costs:

fixed costs and variable costs

If the Korean steel industry subsidizes the steel that it sells to the United States, the

harm done to U.S. steel producers is less than the benefit that accrues to U.S. consumers of steel.

Bubba is a shrimp fisherman who could earn $5,000 as a fishing tour guide. Instead, he is a full-time shrimp fisherman. In calculating the economic profit of his shrimp business, the $5,000 that Bubba gave up is counted as part of the shrimp business's

implicit costs.

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S. minimum wage. Prohibiting such goods is likely to

increase poverty in poor countries and benefit U.S. firms which compete with these imports.

Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve. When selling the 100th widget, the firm will always receive

less marginal revenue on the 100th widget than it received on the 99th widget.

A monopoly firm is a price

maker and has no supply curve

For a monopolist, marginal revenue is

negative when the price effect is greater than the output effect

The deadweight loss associated with a monopoly occurs because the monopolist

produces an output level less than the socially optimal level.

Roger owns a small health store that sells vitamins in a perfectly competitive market. If vitamins sell for $12 per bottle and the average total cost per bottle is $12.50 at the profit-maximizing output level, then in the long run

some firms will exit from the market.

For a large firm that produces and sells automobiles, which of the following costs would be a variable cost?

the cost of the steel that is used in producing automobiles

When a country allows trade and becomes an exporter of a good

the gains of the domestic producers of the good exceed the losses of the domestic consumers of the good

. Trade enhances the economic well-being of a nation in the sense that

trade results in an increase in total surplus.

The two basic approaches that a country can take as a means to achieve free trade are the

unilateral approach and the multilateral approach.

. In the short run, a firm incurs fixed costs

whether it produces output or not.