- is $8
- cannot be determined without total cost
|
Exhibit 0106 |
||
|
Output per day |
Workers per day |
Total Cost |
|
0 |
0 |
$10 |
|
5 |
1 |
20 |
|
15 |
2 |
30 |
|
18 |
3 |
40 |
|
20 |
4 |
50 |
6. In Exhibit 0106, what is fixed cost at 20 units of output?
a. $0
b. $10
c. $40
d. it is impossible to calculate fixed cost unless we know the daily wage
e. it is impossible to calculate fixed cost unless we know variable cost at Q = 15
7. In Exhibit 0106, what are variable costs at 15 units of output?
a. $30
b. $10
c. $1
d. $20
e. it is impossible to calculate variable cost unless we know the daily wage
8. In Exhibit 0106, what is the marginal cost of the 15th unit of output?
a. $30
b. $10
c. $1
d. $20
e. it is impossible to calculate marginal cost unless we know the daily wage
9. If marginal cost is less than average total cost,
a. marginal cost must be falling
b. average total cost must be increasing
c. average variable cost equals average total cost
d. average variable cost must be decreasing
e. average variable cost may be increasing or decreasing
10. With respect to the average cost curves, the marginal cost curve
a. intersects average total cost, average fixed cost, and average variable cost at their minimum points
b. intersects average total cost, average fixed cost, and average variable cost at their maximum points
c. intersects both average total cost and average variable cost at their minimum points
d. intersects average total cost where it is increasing and average variable cost where it is decreasing
e. intersects only average total cost at its minimum point
11. Economies of scale occur where
a. long-run average cost falls as new firms enter the industry
b. short-run average cost falls as new firms enter the industry
c. long-run average cost falls as one firm expands plant size
d. short-run average cost falls as one firm expands plant size
e. long-run average cost rises as one firm expands plant size
12. Minimum efficient scale is the level of output at which
a. short-run average total cost stops decreasing
b. short-run average total cost stops increasing
c. long-run average cost stops decreasing
d. long-run average cost stops increasing
e. profits stop increasing
13. Homogeneous products are
a. pasteurized
b. bland
c. perceived by the consumer to be identical
d. made by one manufacturer
e. made by hand
14. Firms in perfect competition are price takers because
a. each firm is too small compared to the market to be able to affect price
b. one firm determines price and all other firms accept this price
c. firms take the price that government determines
d. firms must accept any price consumers offer them
e. firms earn high profits by "taking" consumers
|
Exhibit 0135 |
||||
|
Q |
TFC |
TVC |
TC |
MC |
|
0 |
$10.00 |
$0.00 |
$10.00 |
|
|
1 |
10.00 |
20.00 |
30.00 |
$20.00 |
|
2 |
10.00 |
38.00 |
48.00 |
18.00 |
|
3 |
10.00 |
54.00 |
64.00 |
16.00 |
|
4 |
10.00 |
72.00 |
82.00 |
18.00 |
|
5 |
10.00 |
92.00 |
102.00 |
20.00 |
|
6 |
10.00 |
114.00 |
124.00 |
22.00 |
|
7 |
10.00 |
138.00 |
148.00 |
24.00 |
15. Consider Exhibit 0135. If the market price is $21, this perfectly competitive firm will
a. earn profits of $3.00
b. earn profits of $2
c. earn profits of $1
d. incur a loss of $10
e. break even
16. Farmer Fanny sells her crops in a perfectly competitive market. If she produces 500 bushels for total revenue of $3,000 and if harvesting the 501st bushel would raise her total cost from $2,500 to $2,510, her
a. revenue will increase by $4 if she harvests the 501st bushel
b. revenue will fall by $4 if she harvests the 501st bushel
c. average fixed cost will rise if she harvests the 501st bushel
d. profit will fall by $10 if she harvests the 501st bushel
e. profit will fall by $4 if she harvests the 501st bushel
17. If the price-taking firm in Exhibit 0126 is currently producing 6 units, then to maximize profits in the short run, it should
a. keep producing 6 units
b. increase production to 12 units
c. increase production to 14 units
d. increase production to 8 units
e. shut down
18. In the short run, a firm will produce a positive amount of output as long as
a. P > AVC at some output level
b. P > MC at some output level
c. P < AVC at some output level
d. AVC < ATC at some output level
e. FC > TR at some output level
19. Suppose, at its present rate of output, a perfectly competitive firm's marginal revenue exceeds both its marginal cost and average variable cost. To maximize profit, the firm should
a. lower the price
b. raise the price
c. increase output
d. reduce output
e. maintain its current rate of output
20. A perfectly competitive firm in the short run determines its quantity supplied at various prices by using
a. the portion of its marginal cost curve rising above its average total cost curve
b. the portion of its marginal cost curve rising above its average variable cost
c. its average variable cost curve
d. its average total cost curve
e. the portion of its average variable cost curve rising above its average fixed cost curve
21. Suppose that an increase in population increases demand in New Haven County's perfectly competitive market for auto repair. Which of the following is true in the short run?
a. Auto repair centers may be able to earn economic profit.
b. Normal profits increase.
c. The market supply curve of auto repair services shifts to the left.
d. Either price or output is likely to increase, but it's impossible to say which.
e. After firms have had time to adjust to the new equilibrium, the price of auto repair services will exceed the marginal cost.
22. Which of the characteristics of perfect competition assures that economic profit will be zero in the long run?
a. Each firm is small relative to the market.
b. Each firm has access to perfect information.
c. Goods produced in the market are homogeneous.
d. Each firm is a price taker.
e. There is easy entry and exit in the market.
23. All of the following are true of a perfectly competitive firm in long-run equilibrium except one. Which is the exception?
a. Its economic profit will be zero.
b. Its accounting profit may be positive.
c. It will be minimizing average total cost.
d. It will be charging a price equal to marginal cost.
e. Marginal cost is minimized.
24. A constant-cost industry is one
a. that faces constant average costs in the short run
b. that experiences economies of scale
c. that experiences stable demand
d. whose cost curves to not change as new firms enter
e. that faces increasing resource prices as new firms enter
25. If a market is productively efficient,
a. the output is being produced at the lowest possible resource cost
b. the output is selling for the lowest possible price
c. economic profit in the market is positive
d. the output being produced is what consumers want
e. no firm can earn a normal profit
26. A perfectly competitive industry in the long run is allocatively efficient because
a. the opportunity cost of resources needed to produce the last unit of output just equals the marginal value to consumers of the last unit
b. it maximizes producer surplus
c. consumer surplus could be larger if the price were lower
d. production occurs at the lowest average total cost