Econ 103 Assignment 5

4.Refer to Table 13-2. What is the marginal product of the sixth worker?

.ANS:Total output of four workers = 450 + 50 = 500 units. Total output of five workers = 500 + 25 = 525 units. 530 -525 = 5 units

12.Refer to Table 13-1.Suppose that Alyson's pet sitting service has a fixed cost of $50 per month for her cell phone. Each worker costs Alyson $60 per day. What is the shape of Alyson's total cost curve as output increases from 45 to 70? a.Total cost increases but gets flatter. b.Total cost increases and gets steeper. c.Total cost decreases and gets flatter. d.Total cost decreases but gets steeper

12.ANS:B

12.Refer to Table 13-2. What is the shape of the marginal-cost curve?

12.ANS:MC = changein TC / changein Q, so although the numerator is 20 for each level of output, the denominator is the marginal productivity, which is always decreasing for the range of output specified in the table. Thus, marginal cost is increasing or upward sloping.

11.Refer to Table 13-2. What is the shape of the average-total-cost curve?

11.ANS:ATC = TC/Q, where TC is graphed on the vertical axis and Q (not labor) is graphed on the horizontal axis. For the range of output specified in the table, as output increases, ATC first decreases, then increases (0.15, 0.14, 0.16, 0.18, 0.21, 0.25), so ATCis U-shaped.

11.Which of the following statements is correct? a.Assuming that explicit costs are positive, economic profit is greater than accounting profit. b.Assuming that explicit costs are positive, accounting profit is greater than economic profit c.Assuming that explicit costs are positive, accounting profit is equal to economic profit d.Assuming that implicit costs are positive, economic profit is positive

11.ANS:C

13.A firm produces 300 units of output at a total cost of $1,000. If fixed costs are $100, a.average fixed cost is $10. b.average variable cost is $3. c.average total cost is $4. d.average total cost is $5.

13.ANS:B

13.If a firm can influence the market price of the good it sells, then it is said to have _

13.ANS:market power

14.A competitive firm sells 100 units of output for $5 per unit. The firm's marginal revenue amounts to __________.

14.ANS:$5

14.Refer to Figure 14-1. Let Q represent the quantity of output and suppose the price of the good is $125. Then a.marginal revenue is $125 at Q= 270. b.marginal revenue is $125 at Q= 322 c.marginal revenue is $125 at Q= 515. d.All of the above are correct.

14.ANS:D

15.A firm maximizes its profit by selling 2,500 units of output with an average revenue of $6.99. The firm's marginal cost at 2,500 units of output is _______

15.ANS:$6.99

15.Refer to Figure 14-1. Suppose the price of the good is $175. If the firm produces and sells 515 units of output, its total revenue is a.$100,525. b.$90,125. c.$84,500. d.$75,250.

15.ANS:B

3.Refer to Table 13-1. For the firm whose production function and costs are specified in the table, its total-cost curve is a.constant. b.increasing at a decreasing rate. c.increasing at an increasing rate. d.unknown because there is no relationship between a firm's production function and its total-cost curve.

3.ANS:C

3.Refer to Table 13-2. What is the total output of five workers?

3.ANS:Total output of four workers = 450 + 50 = 500 units. Total output of five workers = 500 + 25 = 525 unit

31.A competitive firm is currently producing a quantity of output at which marginal revenue exceeds marginal cost. In order to increase its profit, the firm should a.increase the price of the good that it produces and sells. b.increase its quantity of output. c.decrease its total cost. d.decrease its average total cost.

31.ANS:B

32.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. a.i) only b.iii) only c.i) and ii) only d.i), ii), and iii)

32.ANS:A

33.Which of the following statements is correct? a.For all firms, marginal revenue equals the price of the good. b.Only for competitive firms does average revenue equal the price of the good. c.Marginal revenue can be calculated as total revenue divided by the quantity sold. d.Only for competitive firms does average revenue equal marginal revenue.

33.ANS:D

9.Refer to Table 13-2. What is the shape of the average-fixed-cost curve?

9.ANS:AFC is always declining as output increases because the $10 is divided by larger and larger quantities of output.

16.Refer to Figure 14-1. Suppose AVC = $113 when the firm produces 515 units of output. Then the firm's fixed cost amounts to a.$5,500 and its profit amounts to $20,375 b.$5,750 and its profit amounts to $20,375 c.$5,980 and its profit amounts to $25,750. d.$6,180 and its profit amounts to $25,750.

16.ANS:D

17.Refer to Figure 14-1. At what price is the firm's maximum profit zero? a.$80 b.$90 c.$100 d.$125

17.ANS:C

18.Refer to Figure 14-1. Let Q represent the quantity of output and suppose the price of the good is $125. Then a.marginal revenue is $80 at Q= 270. b.marginal revenue is $100 at Q= 322. c.marginal revenue is $175 at Q= 515. d.None of the above are correct.

18.ANS:D

19.Refer to Figure 14-1. When the price of the good is $175, the firm's maximum profit is a.$16,500 .b.$20,375. c.$25,750. d.$90,125.

19.ANS:C

1.Refer to Table 13-2. What is the marginal product of the third worker?

ANS:450 -350 = 100 units

7.Refer to Table 13-2. What is the average variable cost of producing 500 units of output?

ANS:AVC = VC/Q = $80/500 = $0.16

30.In the long run, the number of firms in a competitive industry is a.fixed. b.constant. c.increasing. d.able to adjust to market conditions.

30.ANS:D

4.Refer to Table 13-1. The average variable cost of producing 240 units is a.$0.13. b.$0.19. c.$0.32 d.$0.80.

4.ANS:B

8.Refer to Table 13-2. What is the average fixed cost of producing 450 units of output?

8.ANS:AFC = FC/Q = $10/450 = $0.02

9.Marginal cost is equal to a.TC/Q. b.ATC/Q. c.TC/Q. d.Q/TC.

9.ANS:C

25.In a market with a fixed number of firms, as long as price is a.above average variable cost, each firm's marginal-cost curve is its supply curve. b.above average variable cost, each firm's average-total-cost curve is its supply curve. c.above average total cost, each firm's marginal-cost curve is its supply curve. d.above average total cost, each firm's average-total-cost curve is its supply curve

25.ANS:A

26.In a perfectly competitive market, a.no one seller can influence the price of the product. b.price exceeds marginal revenue for each unit sold. c.average revenue exceeds marginal revenue for each unit sold. d.administrative barriers can make it difficult for firms to enter an industry.

26.ANS:A

27.Firms that operate in perfectly competitive markets try to a.maximize revenues. b.maximize profits .c.equate marginal revenue with average total cost. d.Both b and c are correct.

27.ANS:B

28.Suppose that a firm operating in perfectly competitive market sells 100 units of output. Its total revenues from the sale are $500. Which of the following statements is correct? i)Marginal revenue equals $5. ii)Average revenue equals $5. iii)Price equals $5. a.i) only b.iii) only c.i) and ii) only d.i), ii), and iii)

28.ANS:D

29.Charlene sells cotton candy. The cotton candy industry is competitive. Charlene hires a business consultant to analyze her company's financial records. The consultant recommends that Charlene increase her production. The consultant must have concluded that Charlene's a.total revenues exceed her total accounting costs. b.marginal revenue exceeds her total cost. c.marginal revenue exceeds her marginal cost. d.marginal cost exceeds her marginal revenue.

29.ANS:C

10.If marginal cost is equal to average total cost, then a.marginal cost is minimized. b.average total cost is minimized. c.average variable cost is minimized. d.marginal cost is zero.

10.ANS:B

1. 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 revenue is a.$8,000. b.$12,000. c.$20,000. d.$32,000.

1.ANS:C

10.Refer to Table 13-2. What is the shape of the average-variable-cost curve?

10.ANS:AVC = VC/Q, where VC is graphed on the vertical axis and Q (not labor) is graphed on the horizontal axis. For the range of output specified in the table, as output increases, AVC increases (0.1, 0.11, 0.13, 0.16, 0.19, 0.23).

24.For a firm, marginal revenue minus marginal cost is equal to a.profit b.average total cost. c.change in profit. d.change in average revenue.

24.ANS:C

2. Refer to Table 13-1. What is the marginal product of the third worker? a.80 units b.60 units c.40 units d.20 units

2.ANS:B Output of worker 3 - Output of worker 2 240-180= 60

20.Refer to Figure 14-1. Suppose the price of the good is $175. If the firm produces and sells 514 units of output, its profit is approximately a.$24,995. b.$25,550. c.$25,750. d.$26,025.

20.ANS:C

21.Refer to Figure 14-1. The firm will shut down in the short run if the price of the good is a.$75. b.$85. c.$95. d.All of the above are correct.

21.ANS:A

22.Refer to Figure 14-1. In the long run, the firm will exit the market if the price of the good is a.$75. b.$85. c.$95. d.All of the above are correct.

22.ANS:D

23.Refer to Figure 14-1. In the short run, the firm's maximum profit (or minimum loss) is the same at which of the following pairs of prices? a.$65 and $75 b.$75 and $85 c.$80 and $100 d.$125 and $175

23.ANS:A

34.Christopher is a professional tennis player who gives tennis lessons. The industry is competitive. Christopher hires a business consultant to analyze his financial records. The consultant recommends that Christopher give fewer tennis lessons. The consultant must have concluded that Christopher's a.total revenues exceed his total accounting costs. b.marginal revenue exceeds his total cost. c.marginal revenue exceeds his marginal cost. d.marginal cost exceeds his marginal revenue.

34.ANS:D

35.Laura is a gourmet chef who runs a small catering business in a competitive industry. Laura specializes in making wedding cakes. Laura sells 20 wedding cakes per month. Her monthly total revenue is $5,000. The marginal cost of making a wedding cake is $200. In order to maximize profits, Laura should a. make more than 20 wedding cakes per month. b.make fewer than 20 wedding cakes per month. c.continue to make 20 wedding cakes per month. d.We do not have enough information with which to answer the question.

35.ANS:A

2.Refer to Table 13-2. What is the total output of four workers?

450 + 50 = 500 units

5.Refer to Table 13-1. For the firm whose production function and costs are specified in the table, its average-variable-cost curve is a.constant. b.decreasing c.increasing. d.U-shaped.

5.ANS:C

5.Refer to Table 13-2. What is the shape of the firm's total-cost curve?

5.ANS:The firm's total-cost curve would be increasing at an increasing rate. Total cost is graphed on the vertical axis, while output (not labor) is graphed on the horizontal axis

6.Refer to Table 13-2. What is the average total cost of producing 525 units of output?

6.ANS:ATC = TC/Q = $110/525 = $0.21

6.Refer to Table 13-1. For the firm whose production function and costs are specified in the table, its average-total-cost curve is a.constant. b.decreasing. c.increasing. d.U-shaped.

6.ANS:D

7. Bev is opening her own court-reporting business. She spent $5,000 to purchase her steno machine, $2,000 on a new computer, and $500 on miscellaneous office supplies. She financed these purchases by withdrawing $7,500 from her personal savings account. When she closed the account, the bank representative mentioned that she would have earned 4% interest next year. If Bev hadn't opened her own business, she would have earned a salary of $25,000. In her first year, Bev's revenues were $30,000. Which of the following statements is correct? a.Bev's explicit costs are $7,800. b.Bev's implicit costs are $7,500 .c.Bev's accounting profits exceed her economic profits by $300. d.Bev's implicit costs are $25,300

7.ANS:D

8.Katherine gives piano lessons for $15 per hour. She also grows flowers, which she arranges and sells at the local farmer's market. One day she spends 5 hours planting $50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $150 at the farmer's market. Which of the following statements is correctregarding Katherine's profits from selling flowers? a.Katherine's accounting profits are $100, and her economic profits are $25 .b.Katherine's accounting profits are $100, and her economic profits are $75. c.Katherine's accounting profits are $25, and her economic profits are $100.' d.Katherine's accounting profits are $75, and her economic profits are $125

8.ANS:A