Microeconomics final exam study guide EXAM 3
Figure 15-5: If the monopoly firm perfectly price discriminates, then consumer surplus amounts to
$0
Figure 15-5: If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to
$1,000
Figure 8-6: Without a tax, the equilibrium price and quantity are
$10 and 600
Table 13-8: What is the average variable cost of producing 5 units of output?
$40
If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3, then marginal revenue of selling the eight unit is equal to
-$4
Table 14-14: At what quantity will Bob maximize his profit?
6 units
For a competitive firm,
average revenue equals marginal revenue
A benefit to society of the patent and copyright laws is that those laws
encourage creative activity
Which of the following represents the firm's long run condition for exiting a market?
exit if P>ATC
Suppose a profit maximizing firm in a competitive market produces rubber bands, When the market price for rubber bands falls below the minimum of its average total cost, but still lies above the minimum of average variable cost, in the short run the firm will
experience losses but will continue to produce rubber bands
For a firm in a perfectly competitive industry, total revenue, marginal revenue, and average revenue are all equal.
false, For a firm in a perfectly competitive industry, PRICE, marginal revenue, and average revenue are all equal.
a monopolist produces where P=MC=MR
false, a monopolist produces where P>MC=MR
the difference between accounting profit and economic profit is
implicit costs
In order to sell more of its product, a monopolist must
lower its price
In the short run, a firm's supply curve is equal to the
marginal cost curve above its average variable cost curve
Profit maximizing firms in a competitive market produce an output level where
marginal cost equals marginal revenue
Which of the following formulas would correctly calculate a monopolist's profit?
profit=(price-average total cost) x quantity
A tax on a good
raises the price that buyers effectively pay and lowers the price that sellers effectively receive
Explicit costs
require an outlay of money by the firm
For a good that is taxed, the area on the relevant supply and demand graph that represents government's tax revenue is
smaller than the area that represents the loss of consumer surplus and producer surplus
Figure 15-7: What area represents the total surplus lost due to monopoly pricing?
the triangle 1/2[(F-D)x(B-A)]
Because taxes distort incentives, they cause markets to allocate resources inefficiently
true
During the life of a drug patent, the monopoly pharmaceutical firm maximizes profit by producing the quantity at which revenue equals marginal cost
true
a monopoly creates a deadweight loss to society because it produces less output than the socially efficient level
true
Figure 13-5: Curve A is always declining because
we are dividing fixed costs by higher and higher levels of output
Economic profit
will never exceed accounting profit
Table 14-13: What is Diana's economic profit at the profit maximizing point?
$278
Table 15-6: what is the marginal revenue from the sale of the 3rd unit?
$3
Figure 8-9: The producer surplus with the tax is
$3,000
Table 14-5: the price of the product is
$11
Figure 15-12: A profit maximizing monopolist would create a deadweight loss to society valued at
$12
Scenario 13-9: An economist would calculate the total profit for one photo frame to be
$15
Table 15-12: If the firm produces the profit maximizing level of output, it will earn profits of
$18
The wacky widget company has total fixed costs of $100,000 over year. The firm's average variable cost is $10 for 10,000 widgets. At the level of output, the firm's average total costs equal
$20
The total surplus without the tax is
$20,000
Scenario 15-5: How much additional profit can the airline earn by charging each customer their willingness to pay relative to charging a flat price of $300 per ticket?
$30,000
A firm has a fixed cost of $500 in its first year of operation. When the firm produces 100 units of output, its total costs are $4,500. The marginal cost of producing the 101st unit of output is $300. What is the total cost of producing 101 units?
$4,800
Figure 8-2: The amount of the tax on each unit of the good is
$5
Table 14-10: The marginal cost for producing the 4th unit is
$8
Figure 8-7: As a result of the tax, consumer surplus decreases by
$80, producer surplus decreases by $80, tax revenue is $120, and deadweight loss is $40
Table 13-3: The marginal product of the fourth worker is
10 units
In the market for widgets, the supply curve is the typical upward sloping straight line, and the demand curve us the typical downward sloping straight line. The equilibrium quantity in the market for widgets is 250 per month when there is no tax. Then a tax of $6 per widget is imposed. As a result, the government is able to raise $750 per month in tax revenue. We can conclude that the after tax quantity of widgets is
125 per month
Figure 15-8: To maximize total surplus, a benevolent social planner would choose which of the following outcomes?
150 units of output and a price of $15 per unit
When a monopolist decreases the price of its good, consumers
buy more
When a good is taxed, the tax revenue collected by the government equals the decrease in the welfare of buyers and sellers caused by the tax
false, also deadweight loss
in the short run, if a firm produces nothing, total costs are zero
false, there will still be fixed costs
For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $10 and a marginal cost of $11. It follows that the
firm's profit maximizing level of output is less than 100 units