question
Adrianne's Premium Packaging Service subcontracts with a chocolate manufacturer to box premium chocolates for their mail-order catalogue business. She rents a small room for $250 a week in the downtown business district that serves as her factory. She can hire workers for $275 a week.
Refer to Table 13-2. One week, Adrianne earns a profit of $125. If her revenue for the week is $100, how many boxes of chocolate did she produce?
Refer to Table 13-2. One week, Adrianne earns a profit of $125. If her revenue for the week is $100, how many boxes of chocolate did she produce?
answer
780
question
Which of the following equations explains the relationship among different cost functions?
answer
Average total cost = Total cost ÷ Quantity of output
question
Refer to Table 13-3. What is the average total cost of creating the tenth instructional module in a given month?
answer
$1088
question
For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $10 and a marginal cost of $7. Which statement best explains the firm's profit-maximizing decision?
answer
The production of the 100th unit of output increases the firm's profit by $3.
question
Are the decisions to shut down and exit a market short-run or long-run decisions?
answer
The decision to shut down is a short-run decision, whereas the decision to exit is a long-run decision.
question
The competitive firm's long-run supply curve is that portion of the marginal-cost curve that lies above which average cost?
answer
total cost
question
In the long run, what happens to inputs?
answer
Inputs that were fixed in the short run become variable.
question
When do constant returns to scale occur?
answer
when long-run average total costs are constant as output increases
question
In the long-run equilibrium of a competitive market, the number of firms in the market adjusts so that all of the market demand is satisfied. At what price would this happen?
answer
at the minimum value of average total cost
question
Which cost would be regarded as an implicit cost?
answer
the opportunity cost of financial capital that has been invested in the business
question
Refer to Figure 14-13. If the market starts in equilibrium at point C in panel (b), what will a decrease in demand ultimately lead to in the long run?
answer
fewer firms in the market, and lower levels of production for each firm
question
What do we know about the short-run supply curve for a firm in a perfectly competitive market?
answer
It is the same as its marginal-cost curve (above average variable cost).
question
When existing firms in a competitive market are profitable, which of the following has an incentive?
answer
new firms to enter the market, even without government subsidies
question
Zach took $500,000 out of the bank and used it to start his new cookie business. The bank account pays 4 percent interest per year. During the first year of his business, Zach sold 15,000 boxes of cookies for $3 per box. Also, during the first year, the cookie business incurred costs that required outlays of money amounting to $14,000.
Refer to Scenario 13-3. What was Zach's economic profit for the year?
Refer to Scenario 13-3. What was Zach's economic profit for the year?
answer
$11,000
question
Refer to Table 13-3. One month, Teacher's Helper produced 20 instructional modules. What was the average fixed cost for that month?
answer
54
question
What does average total cost tell us?
answer
the cost of a typical unit of output, if total cost is divided evenly over all the units produced
question
Blake decides to spend a spring day in the field planting wheat with some help from some workers he hires. Blake earns total revenue of $870. Blake incurs the following costs: $50 for renting a tractor, $150 for fertilizer, and $100 for wages paid to workers. Blake used $5000 that he could have invested in his savings account at 10 percent interest to organize his spring day planting wheat. In addition, Blake gave up $130 he could have earned at his other job in deciding to plant wheat. What is Blake's accounting profit?
answer
$570
question
The Wheeler Wheat Farm sells wheat to a grain broker in Regina, Saskatchewan. Since the market for wheat is generally considered to be competitive, what would the Wheeler Wheat Farm choose to do to maximize its profit?
answer
It would produce the quantity at which market price is equal to the farm's marginal cost of production.
question
Which of the following does NOT calculate accounting profit or economic profit properly?
answer
Accounting profit = Total revenue - Implicit costs
question
When a competitive firm triples the amount of output it sells, what is the result?
answer
Its total revenue triples
question
Market demand is given as QD = 250 - P. Market supply is given as QS = 1.5P. Each identical firm has MC = 10Q and ATC = 8Q. What is a firm's profit?
answer
$200
question
When marginal cost is rising, what must happen to average variable cost?
answer
It could be rising or falling
question
Why are long-run average-total-cost curves often U-shaped?
answer
because of increasing specialization of workers at low levels of production and increasing coordination problems at high levels of production
question
Market demand is given as QD = 250 - P. Market supply is given as QS = 1.5P. Each identical firm has MC = 10Q and ATC = 8Q. What is a firm's average total cost?
answer
$80
question
Market demand is given as QD = 75 - 2P. Market supply is given as QS = 2P + 15. Each identical firm has MC = 3Q and ATC = 2Q. What is a firm's profit?
answer
$25.00
question
What happens if a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue?
answer
A one-unit decrease in output would increase the firm's profit.
question
Market demand is given as QD = 110 - 2P. Market supply is given as QS = 3P + 10. Each identical firm has MC = 10Q and ATC = 5Q. What is a firm's profit?
answer
$20
question
Market demand is given as QD = 120 - 2P. Market supply is given as QS = 2P. Each identical firm has MC = 6Q and ATC = 3Q. What is a firm's average total cost?
answer
$15
question
Market demand is given as QD = 40 - P. Market supply is given as QS = 3P. Each identical firm has MC = 5Q and ATC = 3Q. What quantity of output will a typical firm produce?
answer
2
question
From the information in Table 13-4, what can we conclude about Beth's marginal cost?
answer
It declines as output increases from 0 to 40 but increases after that.
question
Market demand is given as QD = 220 - 3P. Market supply is given as QS = 3P + 40. Each identical firm has MC = 0.3Q and ATC = 0.2Q. What quantity of output will a typical firm produce?
answer
100
question
Market demand is given as QD = 140 - 4P. Market supply is given as QS = 3P. Each identical firm has MC = 5Q and ATC = 2Q. What is a firm's profit?
answer
$48
question
Market demand is given as QD = 200 - P. Market supply is given as QS = 4P + 100. Each identical firm has MC = 4Q and ATC = 2Q. What is a firm's average total cost?
answer
10
question
Market demand is given as QD = 300 - 5P. Market supply is given as QS = 5P. Each identical firm has MC = 6Q and ATC = 4Q. What quantity of output will a typical firm produce?
answer
5
question
Assume a certain firm is producing 1000 units of output (so Q = 1000). At Q = 1000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit. At Q = 999, what is the firm's profit?
answer
$1003
question
Market demand is given as QD = 60 - P. Market supply is given as QS = 3P. Each identical firm has MC = 3Q and ATC = 1.5Q. What is a firm's average total cost?
answer
$7.50
question
From the information in Table 13-5, what can we conclude about Bob's average variable cost?
answer
It decreases as output rises from 0 to 26 but rises after that.
question
Market demand is given as QD = 110 - 2P. Market supply is given as QS = 3P + 10. Each identical firm has MC = 10Q and ATC = 5Q. What is a firm's average total cost?
answer
$10
question
Refer to Table 14-6. What is the shape of the long-run supply curve for this market?
answer
horizontal at a price of $5.00
question
Market demand is given as QD = 140 - 4P. Market supply is given as QS = 3P. Each identical firm has MC = 5Q and ATC = 2Q. What is a firm's average total cost?
answer
$8
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
