ECON-E 201 final

All of the following are examples of price discrimination EXCEPT

"buy now, pay later" payment options.

Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed. What is Ernie's average total cost?

$10

The above figure illustrates a single-price unregulated monopolist. If the monopolist maximizes its profit, the deadweight loss equals ________.

$10,000

For the monopoly shown in the figure above, when it maximizes its profit the marginal cost is ________ per unit and the price is ________ per unit.

$10; $30

The table above gives information about the labor market in Lantis, a community in which the labor market is perfectly competitive. If the demand for labor decreases by 200 hours per day, the equilibrium wage rate falls to ________ an hour and the quantity of labor employed ________ hours per day.

$10; decreases to 300

Consider the perfectly competitive firm in the above figure. The shutdown point occurs at a price of

$11.00.

Roxie's Movie Theatre is the only one in town. The table above gives the demand schedule for movies. If Roxie's is a single-price monopoly and the marginal cost of a movie is $6, Roxie's will charge ________ a movie and will sell ________ movie tickets a week.

$12; 200

The table above gives information about the labor market in Lantis, a community in which the labor market is perfectly competitive. The equilibrium wage rate is ________ an hour and the quantity of labor employed is ________ hours per day.

$15; 400

Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $17.50, what is the firm's economic profit?

$2.50 per hour

Natural gas is a natural monopoly. The figure shows the market for natural gas in the city of Lucknow. When an average cost price rule regulation is imposed, the price per household per month is ________.

$20 and 30,000 households are served

The figure above shows the demand and cost curves for a single-price monopoly. What economic profit does this firm make?

$200

Interlace, Inc. produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. When Interlace maximizes its profit, the deadweight loss is

$3,000.

When Sam's Scarves uses 2 knitting machines and employs 3 people, total revenue is $330 a day. When Sam's Scarves uses 2 knitting machines and employs 4 people, total revenue is $360 a day. The value of marginal product of the third worker is ________.

$30

In the figure above, the deadweight loss from the tariff is ________.

$32 million

Gene's Car Wash is a natural monopoly. To wash 100 cars a week, if Gene is unregulated, he would charge a price of $10. Gene's long-run average cost for washing 100 cars is $8, his average variable cost is $6, and his marginal cost is $4. If Gene was regulated using a marginal cost pricing rule, the price he would be allowed to charge to wash 100 cars is

$4.

For the monopoly shown in the figure above, the economic profit is

$40.

Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed. If he increases output to 220 earmuffs, his total cost increases to $2100, and his fixed cost remains $400. What is Ernie's marginal cost per earmuff?

$5

If the natural monopoly shown in the figure above is unregulated, then it will charge a price of

$6.

In the figure above, the U.S. government's revenue from the tariff is ________.

$64 million

Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. The firm's shutdown point is Quantity (pizzas per hour) Total cost, TC (dollars per hour) 0 10 1 18 2 30 3 48 4 70 5 98 6 120

$8.

A firm that can sell its output for $40 per unit. When it increases its labor force from 4 workers to 5 workers its output increases from 15 to 17 units. The value of marginal product of the 5th worker is

$80.

For the single-price monopoly shown in the figure above, the deadweight loss is

between $10.01 and $20.

Jane's Garage Cleaning is a perfectly competitive firm that currently cleans 40 garages a week. Jane's marginal cost is less than the price she charges. Jane can increase her profit if she

cleans more than 40 garages a week.

The fundamental force that drives international trade is

comparative advantage

Prior to international trade, the price of good X is lower in country A than in country B. This means that we know that

country A has a comparative advantage in the production of product X.

Compared to a similar perfectly competitive industry, a single-price monopoly

creates a deadweight loss and decreases consumer surplus.

The figure above shows a local lawn cutting service's demand for labor curve when the price of cutting an acre of lawn is $50 per acre. If the wage rate rises from $100 per day to $200 per day, the firm's demand for labor curve

does not shift at all, but the firm moves upward along the curve.

Suppose sugar is exported from a nation. In the sugar market who does NOT benefit from the exports?

domestic consumers

If Dell Computer Company could produce more computers at lower long-run average cost by increasing the quantity of all the inputs it uses, Dell definitely would experience

economies of scale.

Comparative advantage implies that a country will

export those goods in which the country has a comparative advantage.

Initially, a perfectly competitive industry that has 1,000 firms is in long-run equilibrium. Then 100 firms in the industry adopt a new technology that reduces the average cost of producing the good. In the short run, the price ________, firms with the new technology make ________ economic profit, and firms with the old technology ________.

falls; positive; incur economic losses

The figure above shows a local lawn cutting service's demand for labor curve when the price of cutting an acre of lawn is $50 per acre. If the price of lawn cutting rises to $60 per acre of lawn cut, the firm's demand for labor curve

shifts rightward.

Suppose firms in a perfectly competitive market are incurring an economic loss. Over time,

some firms leave the market, so the price rises and the economic loss decreases.

Which curve intersects the AVC curve at its minimum point?

the MC curve

Economies of scale refer to the range of output over which

the long-run average cost falls as output increases.

What is one reason why corn production, which takes place in a perfectly competitive market, would achieve an efficient use of resources?

Because a perfectly competitive firm produces at the lowest possible long run average total cost

In July 2008, the Federal Communications Commission approved the merger of satellite radio providers XM Satellite and Sirius Satellite Radio, establishing a single satellite radio company in America. Under the terms of the deal, the companies agreed not to raise prices for the next three years. Why would the FTC require prices not to increase for three years?

Compared to competition, monopolies restrict output and charge higher prices.

Minneapolis business Rogue Chocolatier sells specialty chocolate bars with a high cocoa content. If Rogue's average total cost decreases as the business increases plant size, then Rogue experiences:

Economies of scale.

Which of the following would be classified as a fixed cost for the local supermarket?

The rent from the six-year lease for the building the store uses.

During 2005-2006 Europe imported more than $70 million worth of U.S. long-grain rice. In 2006, the European Union threatened to restrict imports of long-grain rice because traces of genetically modified rice were found mixed in to commercial supplies. What would NOT be an effect in the European rice market if U.S. imports were banned?

There would be an increase in long-grain rice consumption.

Suppose, the United States imposes a tariff on imported shirts, $4 per shirt. In the figure above, with the tariff the United States imports ________ million shirts per year.

16

Consider the perfectly competitive firm in the above figure. The profit maximizing level of output for the firm is equal to

17 units.

Tammy sells woolen hats in a perfectly competitive market. The marginal cost of producing 1 hat is $24. The marginal cost of producing a second hat is $26 and the marginal cost of producing a third hat is $28. The market price of a hat is $26. To maximize profit, Tammy produces ________ per day.

2 hats

A firm's average total cost is $60, its average variable cost is $30, and its total fixed cost is $600. Its output is

20 units

The figure above shows the demand and cost curves for a single-price monopoly. What level of output maximizes the firm's economic profit and what price will the firm charge?

20 units, $30 per unit

Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. If the price of a car wash is $4 and the wage rate is $50 per day, how many workers should Winnie employ to maximize his profit?

3

Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $20, what is Giuseppe's profit-maximizing output? Quantity (pizzas per hour) Total cost, TC (dollars per hour) 0 10 1 18 2 3 3 48 4 70 5 98 6 120

3 pizzas per hour

Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $17.50 what is the firm's profit-maximizing output?

3 tattoos per hour

Dustin's copy shop can use four alternative plants. The figure above shows the average total cost curves for Plant 1 (ATC1), Plant 2 (ATC2), Plant 3 (ATC3), and Plant 4 (ATC4).What is Dustin's long-run average cost if the output is 3,000 copies per day?

3.7 cents per copy

The figure below shows the labor demand and labor supply curves for workers in local fast-food restaurants. The fast-food restaurant industry is competitive. A decrease in the supply of labor shifts the labor supply curve from LS0 to LS1. Fast-food restaurants hire ________ and total labor income earned by the fast-food workers ________.

30 hours of labor a day; increases

Interlace, Inc. produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. Interlace's profit maximizing level of output is

30,000 bottles, 70 cents.

In the short run, a perfectly competitive firm will make an economic profit as long as

P > ATC

Which of the following is true for a single-price monopolist?

P > MR

If the United States imposes a tariff on $1 per imported shirt, the tariff will

A) raise the price of a shirt to U.S. consumers. B) benefit U.S. shirt producers. C) decrease imports of shirts into the United States. D) all of the above

Minneapolis business Rogue Chocolatier sells specialty chocolate bars with a high cocoa content. Rogue can produce 15 chocolate bars per day with one employee, 35 with 2, 50 with 3 and 55 with 4 employees. Which statement is true?

Rogue's marginal product curve initially increases and then decreases.

The existence of economies of scale can create ________.

a natural monopoly

The figure below shows a local lawn cutting service's demand for labor curve when the price of cutting an acre of lawn is $50 per acre. If the market wage is $300 per day, the firm will NOT hire a fourth worker because the fourth worker would create

additional revenue that falls short of the worker's wage.

In perfect competition, a firm that maximizes its economic profit will sell its good at a price that is

at the market price.

A firm's marginal cost is $82, its average total cost is $50, and its output is 800 units. Its total cost of producing 801 units is

greater than $40,080.

The figure shows the market for shirts in the United States, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. In the figure above, with international trade the United States ________ million shirts per year.

imports 32

In the figure above, international trade ________ total surplus in the United States by ________.

increases; $128 million

The apple market is perfectly competitive and is in long-run equilibrium. Now a disease kills 50 percent of the apple orchards. In the short run, the price of a bag of apples ________ and the remaining apple growers make ________ economic profit. In the long run, the ________.

increases; positive; orchards will be replanted and economic profit will return to zero

Consider the perfectly competitive firm in the above figure. At the profit maximizing level of output, the firm is

incurring an economic loss equal to $119.00.

A company could produce 99 units of a good for $316 or produce 100 units of the same good for $320. The marginal cost of the 100th unit

is $4.00.

The table above gives information about the labor market in Lantis, a community in which the labor market is perfectly competitive. If the price of the good increases and increases the value of marginal product of labor by $10 an hour, the equilibrium wage rate ________ an hour and the quantity of labor employed ________.

rises to $20; increases to 500 hours

Interlace, Inc. produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. The quantity of soda Interlace Inc. will choose to produce is ________ because when this quantity is produced, ________.

not efficient; marginal social benefit exceeds marginal social cost

The winners from a Japanese tariff on imported cars are I. Japanese car producers. II. Japanese car consumers. III. the Japanese government.

only I and III

The average product of labor exceeds the marginal product of labor

when the average product of labor is falling.

Charlie's Chimps is a perfectly competitive firm that produces cuddly chimps for children. The market price of a chimp is $10, and Charlie's produces 100 chimps at a marginal cost of $9 a chimp. Charlie's ________.

will maximize its profit if it produces more than 100 chimps

Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table below.

will shut down.