Econ Ex3

Charles has decided to open a lawn mowing company. To do so, he purchases mowing equipment for 6k, spends 525 on gas, and pays a part time worker 2500. Prior to opening the lawn mowing company. Charles earned 4k as a lifeguard at the neighborhood swimming pool. If charles had invested the money instead of starting the lawn mowing company, he would have earned 270 in interest. What are charles implicit cost of production?

$4270

Suppose that the price of a bushel of wheat is 7$ and that the market is perfectly competitive. What are the farmers total revenues if 7 bushels of wheat are sold?

$49

What is the average total cost when four workers are hired?

$560

Suppose a pizza parlor has the following production costs 4$ in labor per pizza, 3$ in ingredients per pizza, .40$ in electricity per pizza, 2000$ in restaurant rent per month, and $450 in insurance per month. Assume the pizza parlor produces 1,000 pizzas in a month. What is the total variable cost to produce the 1,000 pizzas?

$7,400

An implicit cost is

A non-monetary opportunity cost

Suppose that the price of a bushel of wheat is 7$ and that the market is perfectly competitive. What is the marginal revenue of the fourth bushel of wheat?

7

What is the total fixed cost when three workers are hired?

8000

Suppose the price of a bushel of wheat is 7$ and that the market is perfectly competitive. What is the profit maximizing quantity of wheat that the farmer will see?

9

Unlike in perfectly competitive markets, in monopolistically competitive markets

Firms face downward-sloping demand curves and the products competitors sell are differentiated

Figure 5 shows a firm in a monopolistically competitive market. What is the firm's profit maximising quantity?

Q2

Based on the info in table 5, how many loaves of ciabatta bread should maria sell?

5

What is the marginal product of labor of the second worker?

10

What is the firm's profit maximising output level?

1350

If the market price is 25$ in a perfect competitive market, then the marginal revenue of selling the fifth unit is

25$

Based on the info in table 5, what price should markia charge?

3.50$

Suppose that the price of a bushel of wheat is 7$ and that the market is perfectly competitive. What are the farmers profits if 8 bushels of wheat are sold?

30.50

A price taker is

A firm that is unable to affect the marketing price

What is the relationship between a perfectly competitive firms marginal cost curve and its supply curve

A firm's marginal cost curve is equal to its supply curve for prices above variable cost

The law of eventually diminishing returns states that:

Adding more of a variable input to the same amount of a fixed input will eventually cause the marginal product of the variable input to decline

Which of the following is an example of a monopoly?

Alabama power (electricity company in tuscaloosa)

A characteristic of the long run is

All inputs can be varied

How are implicit costs different from explicit costs

An explicit cost is a cost that involves spending money while implicit cost is a non monetary cost

The shutdown point for an individual firm occurs

At the minimum of the average variable cost curve

A monopolistically competitive firm is not productively efficient because it produces at an output level where

Average total cost is not at a minimum

Given the information regarding bills automobile collision repair shop, which of the following statements is true?

Bills firm is operating in the short run

Which of the following is most likely to be a variable cost for a business firm?

Cost of shipping products

As the level of output increases, the difference between the average total cost and average variable cost

Decreases because average fixed cost decreases as output increases

The entry of new firms cause the demand curve for an existing firm in monopolistically competitive market to shift the left because________ and become more elastic since_____.

Each will have a smaller share of the existing market, consumers will have additional choices

When are firms likely to enter an industry? when are they likely to exit?

Economic profits attract firms to enter an industry, and economic losses cause firms to exit an industry

Any cost that remains unchanged as output changes represents a firm

Fixed cost

What is the difference between the short run and the long run

In the short run at least one of the firm's inputs is fixed, while in the long run, a firm is able to vary all its inputs and adopt new technology

For a market to be perfectly competitive , there must be:

Many buyers and sellers, with firms selling identical products, and no barriers to new firms entering the market

The more cell phones in use, the more valuable they become to consumers. This is an example of:

Network externalities

What type of market has a few sellers?

Oligopoly

Figure 5 shows a firm in a monopolistically competitive market. What is the firm's profit maximizing price?

P4

If the market price is $20 and the firm is producing at the profit maximising output level, what is the amount of the firm's profit or loss?

Profit of $6750

Figure 5 shows a firm in a monopolistically competitive market. The figure depicts a firm

That is that is at the long run equilibrium

The marginal product of labor is

The additional output that results when one more worker is hired, holding all other resources constant

The four main reasons a firm becomes a monopoly are

The government can block entry, control a key resource, network externalities, and economies of scale

The production function is the relationship between

The inputs employed by a firm and the max output it can produce with those inputs

When maximizing profits, MR=MC is equivalent to P=MC because:

The marginal revenue curve for a perfectly competitive firm is the same as its demand curve

Why are firms willing to accept losses in the short run but not in the long run?

There are fixed costs in the short run but not in the long run

How are profits calculated?

Total revenues minus total costs

The marginal cost curve intersects the average variable cost curve at the level of output where average variable cost is a minimum because:

When the marginal cost of the last unit produced is below the average, it pulls the average down. And when the marginal cost is above the average, it pulls the average up

Why do single firms in perfectly competitive markets face horizontal demand curves?

With many firms selling an identical product, single firms have no effect on market price