Exam 6: Sellers and Incentives

Scenario: In October 2005, the Korean company Samsung pleaded guilty to conspiring with other companies, including Infineon and Hynix Semiconductor, to fix the price of dynamic random access memory (DRAM) chips. Samsung was the third company to be charged in connection with the international cartel and was fined $300 million, the second largest antitrust penalty in U.S. history. In October 2004, four executives from Infineon, a German chip maker, received reduced sentences of 4 to 6 months in federal prison and $250,000 in fines after agreeing to aid the U.S. Department of Justice with their ongoing investigation of the conspiracy. (Source: "Price Fixing," Wikipedia.) -Refer to the scenario above.Which condition of a perfectly competitive market could most directly be hampered in the market for DRAMs?

The following graph shows the short-run production function of a firm. -Refer to the graph above.What is the marginal product of the second input?

Assume that the market demand for pens is given by QD = 650 − 25P and the market supply of pens is given by QS = 200 + 20P.If a firm sells 20 pens and faces an average total cost of $6,calculate the firm's profit.

Increases in the marginal product of labor can be attributed to ________.

The short-run supply curve of a competitive firm is the portion of ________.

Define producer surplus.Calculate the producer surplus from the following figure.

John is a tomato farmer and sells his crops in a perfectly competitive market at the price of $1 per pound.John wants to increase his farm revenue,________.

Scenario: The figure below shows the supply and the demand for a good (left) and the cost curves of an individual firm in this market (right). Initially, all firms in this market have identical cost curves MC₁ and ATC₁, and the market is in equilibrium at point A. Subsequently, a new production technology has been developed for this product. Some of the existing firms as well as some new firms have adopted the new technology, and their cost curves are MC₂ and ATC₂. -Refer to the figure above.At A,the market is ________.

When the price of a good is $100,50 units are supplied.When the price increases to $300,250 units are supplied.Calculate the price elasticity of supply of the good.

The figure below shows the supply and the demand for a good (left) and the cost curves of an individual firm in this market (right). Assume that all firms in this market, including the potential entrants, have identical cost curves. Initially, the market is in equilibrium at point A. -Refer to the figure above.Suppose that new firms enter the market and the quantity supplied increases by 8 units at each price.Then at the new equilibrium,each firm in the market earns ________ and there will be ________.

Producer surplus for a perfectly competitive firm is ________.

Marginal revenue is ________.

A change in the wage rate paid to the variable factor (labor)will shift the ________.

If the price elasticity of supply of a good is 2,a 200 percent increase in the price of the good will change the quantity supplied by ________.

If the marginal cost of producing a good for a perfectly competitive firm is $50 and the market price of the good is $100,the firm should ________.

In the figure below,the producer surplus from the tenth unit sold is ________.

What a firm must pay for its inputs is referred to as its ________.

A short-run decision by a firm to not produce anything during a specific period is referred to as a(n)________.

Marginal cost is the change in the ________.

The following figure depicts the supply curve of a certain firm. -Refer to the figure above.If the slope of the supply curve is 1/2,what is the producer surplus at a price of B?