econ 2020 test 4 sara seals

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

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. Katherine's accounting profits are

$100, and her economic profits are $25.

What is the average revenue when 4 units are sold?

$120

If the market price is $10, what is the firm's short-run economic profit?

$15

The total cost of producing 3 pitchers of lemonade is $5. The total cost of producing 4 pitchers of lemonade is $7. What is the marginal cost of the 4th pitcher of lemonade?

$2

Refer to Figure 15-6. The monopolist earns a profit of

$248

What is the total revenue from selling 7 units?

$840

What is total cost when they produce 170 units of output?

$90

When a restaurant stays open for lunch service even though few customers patronize the restaurant for lunch, which of the following principles is (are) best demonstrated? (i) Fixed costs are sunk in the short run.(ii) In the short run, only fixed costs are important to the decision to stay open for lunch.(iii) If revenue exceeds variable cost, the restaurant owner is making a smart decision to remain open for lunch.

(i) and (iii) only

Refer to Table 15-1. What is the marginal cost of producing the 12th unit?

10

What is the marginal revenue from selling the 3rd unit?

120

What is the marginal product of the third worker?

15 students

Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Together, Eldin and Murphy can paint five houses per week. What is Murphy's marginal product?

2 houses

Refer to Table 15-1. What is the marginal revenue from the sale of the 12th unit?

20

What is the efficient scale?

30 (hundred) bagels per day

If the market price is $10, what is the firm's total revenue?

35

Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. William can arrange 18 bouquets per day. What would be the total daily output of Kate's firm if she hired her husband?

38 bouquets

In the figure, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms. If there are 600 identical firms in this market, what is the value of Q1?

60,000

Refer to Figure 15-9. What is the economically efficient output level?

940 units

What is the average fixed cost (i.e. the fixed cost per unit) when making 90 units?

AFC = FC/Q = $50/90 = $0.56 per unit

Why does a firm in a competitive industry charge the market price?

All of the above are correct.

Which of the following is not an example of a barrier to entry?

An entrepreneur opens a popular new restaurant.

Which of the following is a characteristic of a competitive market?

Buyers and sellers are price takers.

Refer to Figure 15-10. The deadweight loss due to a monopoly is represented by the area

FEH

Suppose a firm in a competitive industry has the following cost curves. If the price is $4.50 in the short run, what will happen in the long run?

Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry.

Refer to Table 15-1. What is the firm's profit-maximizing output and what is the price charged to sell this output?

P = $70; Q = 13

Refer to Figure 15-2. The firm's profit-maximizing price is

P3

Refer to Figure 15-2. To maximize profit, the firm will produce at output level

Q2

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. Applying the principle of sunk costs, what should you do?

You should go home and read a book.

In the long-run,

all inputs can be varied.

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

an implicit cost.

in the above figure, the long-run average cost curve exhibits economies of scale

between 5 and 10 units per hour

If the firm is currently producing 14 units, what would you advise the owners?

continue to operate at 14 units

Pieology Pizzeria rents out the space of their restaurant for $500 a month. This cost of their rent ($500 a month) would be considered a

fixed cost (they have to pay the $500 per month, regardless of how much pizza is produced).

The entry of new firms into a competitive market will

increase market supply and decrease market price

Suppose that a firm in a competitive market has the following cost curves. The firm should shut down if the market price is

less than $4.50.

In the short run, a firm operating in a competitive industry will shut down if price is

less than average variable cost.

Economists normally assume that the goal of a firm is to

maximize its profit.

Profit is defined as total revenue

minus total cost

Which of the following is not a characteristic of a monopoly?

one buyer

The average total cost curves for plants A, B, C and D are shown in the attached figure. Which plant is best to use to produce 60 units per day? (I.e. which plant would minimize the cost per unit - the ATC?)

plant B

The demand curve for a monopoly's product is

the market demand for the product

Charles's math tutoring company experiences diminishing marginal productivity with the addition of the

third worker.

In the long run, a profit-maximizing firm will choose to exit a market when

total revenue is less than total cost.

The ingredients that it takes to make a pizza at Pieology Pizzeria cost $2 per pizza. Some months, Pieology Pizzeria may spend $6000 on ingredients. Some months, Pieoogy Pizzeria may spend $3000 on ingredients. This cost of ingredients is an example of a

variable cost (it varies with how many pizzas are produced that month)

A monopolist's profit-maximizing price and output correspond to the point on a graph

where marginal revenue equals marginal cost and charging the price on the market demand curve for that output.