Question 1

Which of the following is true?

Accepted Answer

A)  Accounting profits = Revenues − Implicit costs − Explicit costs 
B)  Economic profits = Revenues − Explicit costs 
C)  Accounting profits = Revenues − Implicit costs 
D)  Economic profits = Accounting profits − Implicit costs 
A)  Accounting profits = Revenues − Implicit costs − Explicit costs 
B)  Economic profits = Revenues − Explicit costs 
C)  Accounting profits = Revenues − Implicit costs 
D)  Economic profits = Accounting profits − Implicit costs

Question 2

The long-run supply curve for a firm in a perfectly competitive industry is ________.

Accepted Answer

A)  negatively sloped 
B)  positively sloped 
C)  vertical 
D)  horizontal 
A)  negatively sloped 
B)  positively sloped 
C)  vertical 
D)  horizontal

Question 3

The figure below shows cost curves of a firm in a competitive market. The firm always makes the choice to maximize its profit.
  
-Refer to the figure above.If the market price of the product is $3.25,what is the firm's fixed cost?

Accepted Answer

A)  $1,200 
B)  $1,100 
C)  $900 
D)  $600 
A)  $1,200 
B)  $1,100 
C)  $900 
D)  $600

Question 4

Consider the following two scenarios:
i)The marginal product of a worker in a firm is 10 units.When an additional worker is employed,his marginal product is less than 10 units.
ii)The average total cost of a firm producing 10 units of output is $200.When it produces an additional unit,the average total cost increases to $300.
a)What is the difference between these scenarios?
b)What could be the reason behind both phenomena occurring?
c)Does specialization explain either of the two scenarios?

Accepted Answer

a)The first scenario represents diminish

Question 5

The figure below shows the marginal cost (circles) and the average variable cost (crosses) of a firm in a competitive market. The firm always makes the choice to maximize its profit.
  
-Refer to the figure above.If the market price of the product is $3,400,what is the firm's producer surplus?

Accepted Answer

A)  $5,700 
B)  $3,250 
C)  $1,700 
D)  $880 
A)  $5,700 
B)  $3,250 
C)  $1,700 
D)  $880

Question 6

A bakery that produces 100 loaves of bread has a variable cost of $50 and a fixed cost of $200.Calculate the total cost,average total cost,average variable cost,and average fixed cost of the bakery.

Accepted Answer

The total cost of the bakery = $50 + $20

Question 7

The figure below shows the cost curves of a firm in a competitive market. The firm always makes the choice to maximize its profit.
  
-Refer to the figure above.If the market price of the product is $1.50,the firm's profit maximizing output is ________ and its maximum profit is ________.

Accepted Answer

A)  1,200 units; -$900 
B)  1,100 units; -$300 
C)  900 units; $0.00 
D)  0 or 900 units; -$600 
A)  1,200 units; -$900 
B)  1,100 units; -$300 
C)  900 units; $0.00 
D)  0 or 900 units; -$600

Question 8

Which market is more likely to be perfectly competitive?

Accepted Answer

A)  Electric cars in the United States 
B)  Bowls of white rice in Chinatown, New York City 
C)  Vodka in Russia during the Soviet union era 
D)  Luxury watches in Switzerland 
A)  Electric cars in the United States 
B)  Bowls of white rice in Chinatown, New York City 
C)  Vodka in Russia during the Soviet union era 
D)  Luxury watches in Switzerland

Question 9

The output of a bakery is 250 loaves of bread when 10 workers are employed.If one more worker is hired,the total output increases to 275 loaves.Given that labor is the only variable input that the bakery uses and the market wage rate is $10,calculate the marginal cost when employment is increased from 10 to 11 workers.

Accepted Answer

The marginal cost when 275 loa

Question 10

The figure below shows the marginal cost (circles) and the average variable cost (crosses) of a firm in a competitive market. The firm always makes the choice to maximize its profit.
  
-Refer to the figure above.If the market price of the product is $5,000,what is the firm's producer surplus?

Accepted Answer

A)  $30,000 
B)  $18,400 
C)  $13,700 
D)  $4,900 
A)  $30,000 
B)  $18,400 
C)  $13,700 
D)  $4,900

Question 11

The following table shows the total output, number of workers employed, variable costs, and fixed costs of a firm.
  
-Refer to the table above.Suppose the only variable input that the firm uses is labor.What is the wage paid to a worker in the firm?

Accepted Answer

A)  $1 
B)  $5 
C)  $10 
D)  $15 
A)  $1 
B)  $5 
C)  $10 
D)  $15

Question 12

If price is greater than average total cost for a perfectly competitive firm,________.

Accepted Answer

A)  average fixed costs must be increasing 
B)  the firm is earning positive economic profits 
C)  the firm is earning zero economic profits 
D)  the firm is realizing economic losses (economic profits are negative) 
A)  average fixed costs must be increasing 
B)  the firm is earning positive economic profits 
C)  the firm is earning zero economic profits 
D)  the firm is realizing economic losses (economic profits are negative)

Question 13

The following figure shows the cost curves on a firm that operates in a competitive market. Assume that all the firms in this market have identical cost structure.
  
-Refer to the graph above.Which of the following graphs correctly represents this competitive market's demand and supply in the short run?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 14

A firm sells 30 units of its product at a price of $5 per unit.It incurs a fixed cost of $100 and a variable cost of $20.The firm's profit is ________.

Accepted Answer

A)  $30 
B)  $50 
C)  $100 
D)  $150 
A)  $30 
B)  $50 
C)  $100 
D)  $150

Question 15

Which of the following is true of a good with a perfectly elastic supply?

Accepted Answer

A)  Any increase in the price of the good will lead to a decrease in the seller's revenue. 
B)  Any increase in the price of the good will decrease the quantity supplied of the good by more than the price change. 
C)  Any increase in the price of the good will induce a firm to supply its maximum possible quantity of the good. 
D)  Any increase in the price of the good will increase the quantity supplied of the good exactly by an amount equal to the price change. 
A)  Any increase in the price of the good will lead to a decrease in the seller's revenue. 
B)  Any increase in the price of the good will decrease the quantity supplied of the good by more than the price change. 
C)  Any increase in the price of the good will induce a firm to supply its maximum possible quantity of the good. 
D)  Any increase in the price of the good will increase the quantity supplied of the good exactly by an amount equal to the price change.

Question 16

Which of the following is NOT an element of a seller's decision-making process in a perfectly competitive market?

Accepted Answer

A)  The relationship between inputs and output 
B)  The cost of inputs 
C)  The price of output 
D)  The number of buyers in the market 
A)  The relationship between inputs and output 
B)  The cost of inputs 
C)  The price of output 
D)  The number of buyers in the market

Question 17

Which of the following is true for a firm that enjoys economies of scale?

Accepted Answer

A)  Marginal revenue is falling as output increases. 
B)  Average total cost is falling as output increases. 
C)  Marginal cost is constant as output increases. 
D)  Marginal cost is increasing as output increases. 
A)  Marginal revenue is falling as output increases. 
B)  Average total cost is falling as output increases. 
C)  Marginal cost is constant as output increases. 
D)  Marginal cost is increasing as output increases.

Question 18

The following figure depicts the supply curve of a certain firm.
  
-Refer to the figure above.If the elasticity of supply is 0,2630 when the price changes from 30 to 70,what is the quantity at the price of $30?

Accepted Answer

A)  220 
B)  222 
C)  224 
D)  226 
A)  220 
B)  222 
C)  224 
D)  226

Question 19

The following table shows the total output, variable costs, fixed costs, total costs, average total costs, and marginal costs of a firm, with some cells in the table intentionally left blank.
  
-Refer to the table above.What is the marginal cost when the firm produces 5 units of output?

Accepted Answer

A)  $10 
B)  $0.50 
C)  $1 
D)  $2 
A)  $10 
B)  $0.50 
C)  $1 
D)  $2

Question 20

________ occur when average total cost falls as the quantity produced increases.

Accepted Answer

A)  Increasing marginal returns 
B)  Decreasing marginal returns 
C)  Economies of scale 
D)  Diseconomies of scale 
A)  Increasing marginal returns 
B)  Decreasing marginal returns 
C)  Economies of scale 
D)  Diseconomies of scale

Which of the following is true?

The long-run supply curve for a firm in a perfectly competitive industry is ________.

The figure below shows cost curves of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above.If the market price of the product is $3.25,what is the firm's fixed cost?

The figure below shows the marginal cost (circles) and the average variable cost (crosses) of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above.If the market price of the product is $3,400,what is the firm's producer surplus?

A bakery that produces 100 loaves of bread has a variable cost of $50 and a fixed cost of $200.Calculate the total cost,average total cost,average variable cost,and average fixed cost of the bakery.

The figure below shows the cost curves of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above.If the market price of the product is $1.50,the firm's profit maximizing output is and its maximum profit is .

Which market is more likely to be perfectly competitive?

The figure below shows the marginal cost (circles) and the average variable cost (crosses) of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above.If the market price of the product is $5,000,what is the firm's producer surplus?

The following table shows the total output, number of workers employed, variable costs, and fixed costs of a firm. -Refer to the table above.Suppose the only variable input that the firm uses is labor.What is the wage paid to a worker in the firm?

If price is greater than average total cost for a perfectly competitive firm,________.

A firm sells 30 units of its product at a price of $5 per unit.It incurs a fixed cost of $100 and a variable cost of $20.The firm's profit is ________.

Which of the following is true of a good with a perfectly elastic supply?

Which of the following is NOT an element of a seller's decision-making process in a perfectly competitive market?

Which of the following is true for a firm that enjoys economies of scale?

The following figure depicts the supply curve of a certain firm. -Refer to the figure above.If the elasticity of supply is 0,2630 when the price changes from 30 to 70,what is the quantity at the price of $30?

The following table shows the total output, variable costs, fixed costs, total costs, average total costs, and marginal costs of a firm, with some cells in the table intentionally left blank. -Refer to the table above.What is the marginal cost when the firm produces 5 units of output?

________ occur when average total cost falls as the quantity produced increases.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Consumers and Incentives

Perfect Competition and the Invisible Hand

Trade

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Monopoly

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

Filters

Exam 6: Sellers and Incentives

Which of the following is true?

The long-run supply curve for a firm in a perfectly competitive industry is ________.

The figure below shows cost curves of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above.If the market price of the product is $3.25,what is the firm's fixed cost?

The figure below shows the marginal cost (circles) and the average variable cost (crosses) of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above.If the market price of the product is $3,400,what is the firm's producer surplus?

A bakery that produces 100 loaves of bread has a variable cost of $50 and a fixed cost of $200.Calculate the total cost,average total cost,average variable cost,and average fixed cost of the bakery.

The figure below shows the cost curves of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above.If the market price of the product is $1.50,the firm's profit maximizing output is ________ and its maximum profit is ________.

Which market is more likely to be perfectly competitive?

The figure below shows the marginal cost (circles) and the average variable cost (crosses) of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above.If the market price of the product is $5,000,what is the firm's producer surplus?

The following table shows the total output, number of workers employed, variable costs, and fixed costs of a firm. -Refer to the table above.Suppose the only variable input that the firm uses is labor.What is the wage paid to a worker in the firm?

If price is greater than average total cost for a perfectly competitive firm,________.

A firm sells 30 units of its product at a price of $5 per unit.It incurs a fixed cost of $100 and a variable cost of $20.The firm's profit is ________.

Which of the following is true of a good with a perfectly elastic supply?

Which of the following is NOT an element of a seller's decision-making process in a perfectly competitive market?

Which of the following is true for a firm that enjoys economies of scale?

The following figure depicts the supply curve of a certain firm. -Refer to the figure above.If the elasticity of supply is 0,2630 when the price changes from 30 to 70,what is the quantity at the price of $30?

The following table shows the total output, variable costs, fixed costs, total costs, average total costs, and marginal costs of a firm, with some cells in the table intentionally left blank. -Refer to the table above.What is the marginal cost when the firm produces 5 units of output?

________ occur when average total cost falls as the quantity produced increases.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Consumers and Incentives

Perfect Competition and the Invisible Hand

Trade

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Monopoly

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

Filters

The figure below shows the cost curves of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above.If the market price of the product is $1.50,the firm's profit maximizing output is and its maximum profit is .