question

A firm produces 10 widgets that they sell for $15 each. The average variable cost of production is $13 per widget. The fixed cost for this firm equals $20. What is the value of this firm's profits?

answer

0

question

Suppose perfectly competitive market conditions are characterized by the following inverse demand and inverse supply functions: P= 30 - 5Q and P = 10Q. Then, the demand curve facing an individual firm

operating in this market is

operating in this market is

answer

A horizontal line at $20

question

Jane pays the market price of $75 for a new pair of running shoes, even though she would be happy to pay a maximum of $100 for the same pair of shoes. This is an example of the concept of

answer

Consumer surplus

question

As price falls, demand

answer

rises

question

Suppose that sellers value a "good" car at $10,500 and a "bad" car at $5,500, but quality is not observed by the buyer before purchasing. What is the expected value of a used car when 60% of the cars are "good" and 40% are "bad"?

answer

$8,500

question

Suppose that supply decreases and demand increases. What effect will this have on price and quantity?

answer

Price will decrease and quantity will increase

question

Suppose the demand for X is given by QXd = 50 - 8Px - 14Py - 13M + 12A, where Px represents the price of good X, Py is the price of good Y, M is income and A is the amount of advertising on good X. Based on

this information, we know that good Y is

this information, we know that good Y is

answer

A complement for good X

question

What would happen in the short run to the price and quantity of Ramen Noodles sold during an economic recession? (Note: the short run assumes that sellers can only make minor adjustments to noodle

production levels)

production levels)

answer

Price and quantity would both decrease

question

Suppose the own-price elasticity of demand for good X is -0.5, and that the quantity demanded of good X decreases by 50%. We would expect

the price of good X to

the price of good X to

answer

Increase by 100%

question

Which of the following features is common to both perfectly competitive markets and monopolistically competitive markets?

answer

Long-run profits are zero.

question

In a perfectly competitive industry, long run equilibrium is characterized by

answer

P=MR

question

One of the sources of market power for a monopoly may be

answer

Economies of scale

question

The substitution effect

answer

Reduces the quantity demanded of a good when its price increases.

question

If the price of good Y decreases, what will happen to the budget line?

answer

It will become flatter

question

The cross price elasticity of demand between goods X and Y is 2.0. If the quantity demanded of Y decreases by 20%, the price of X will:

answer

Decrease by 10%

question

If the government sets a price floor of $1.00 for a gallon of gas, the most likely consequence would be

answer

no change in the gas market.

question

Given that income is $1000 and the price of good Y is $50. What is the vertical intercept of the budget line?

answer

20

question

Which of the following market structures would you expect to yield the greatest product variety?

answer

monopolistic competition

question

In general, which of the following implies that a marginal cost curve will eventually increase as a firm produces more output?

answer

The law of diminishing returns

question

The income elasticity of demand for good Y is -3.5. If incomes decreases by 7%, the quantity demanded of Y will:

answer

Increase by 24.5%

question

The curve showing all the combinations of inputs that can be purchased with a given outlay of funds is called a(n)

answer

isocost

question

If there are few close substitutes for a good, demand tends to be relatively

answer

inelastic

question

The opportunity cost of an action is the

answer

Value of the most highly valued alternative action given up

question

For the monopolist in the long run making a profit, the difference between the average variable costs and average total costs is

answer

Average fixed cost

question

When marginal cost curve is below an average cost curve, marginal cost

answer

is increasing with increasing output

question

For the cost function C(Q) = 100 + 2Q + 3Q2, the total fixed cost of producing 3 units of output is about

answer

33

question

For the cost function C(Q) = 100 + 2Q + 3Q2, the average cost of producing 4 units of output is

answer

156

question

Demand for a monopolistically competitive firm's product becomes more elastic as their product becomes

answer

more differentiated and less similar to the to the demand faced by the perfect competitor.

question

Using the above demand curve, if the marginal cost were $14, how many units of output would this profit maximizing monopolist produce?

answer

2

question

According to Steven Levitt and Stephen Dubner, does a child's name determine their success in life? Please explain.

answer

No,

question

You are now a prisoner faced with a dilemma. You must choose to either keep the 3 points for this question for yourself or donate 0.33 points to the class pool. The total amount of points you will receive is the sum of the pool points plus the amount you have kept for yourself. For example, assume 12 of your classmates (24 total students, so you've

got 23 classmates) each donate 0.33 points to the pool then there will be 4.0 points in the pool. If you choose to donate your 0.33 points to the pool also, you will get 4.33 points; however, if you keep your 3

points then you will receive 7.0 points. The maximum you can receive is about 10.6 points and the minimum is 0.33 points. Please make your choice.

got 23 classmates) each donate 0.33 points to the pool then there will be 4.0 points in the pool. If you choose to donate your 0.33 points to the pool also, you will get 4.33 points; however, if you keep your 3

points then you will receive 7.0 points. The maximum you can receive is about 10.6 points and the minimum is 0.33 points. Please make your choice.

answer

Compete - keep my 3 points plus the class pool points.

question

What was the best Wall Street Journal article you read this semester?

answer

"What is Wrong With The Producer Price Index? Rent is Too Damn

High".

High".

question

A firm produces 10 widgets that they sell for $15 each. The average variable cost of production is $13 per widget. The fixed cost for this firm equals $20. What is the value of this firm's profits?

answer

$0