Microeconomics Quiz Answers – Unit 3 (no graph or chart questions)

Which of the following is an implicit cost of owning and operating a farm?

Barney decides to quit his job as a corporate accountant, which pays $10,000 a month, and goes into business for himself as a certified public accountant.
He runs his business from his converted garage apartment, which he could rent out for $300 a month if he wasn't using it as a home office. He must purchase office supplies worth $75 a month, and his monthly electricity bill has increased by $50 now that he is working out of his home office.
After six months of working from home, Barney has earned an average of $12,000 per month.

What are Barney's monthly explicit costs?

Barney decides to quit his job as a corporate accountant, which pays $10,000 a month, and goes into business for himself as a certified public accountant.
He runs his business from his converted garage apartment, which he could rent out for $300 a month if he wasn't using it as a home office. He must purchase office supplies worth $75 a month, and his monthly electricity bill has increased by $50 now that he is working out of his home office.
After six months of working from home, Barney has earned an average of $12,000 per month.

What are Barney's monthly implicit costs?

Barney decides to quit his job as a corporate accountant, which pays $10,000 a month, and goes into business for himself as a certified public accountant.
He runs his business from his converted garage apartment, which he could rent out for $300 a month if he wasn't using it as a home office. He must purchase office supplies worth $75 a month, and his monthly electricity bill has increased by $50 now that he is working out of his home office.
After six months of working from home, Barney has earned an average of $12,000 per month.

What are Barney's monthly economic costs?

Which of the following costs is an explicit cost for you?

Barney decides to quit his job as a corporate accountant, which pays $10,000 a month, and goes into business for himself as a certified public accountant.
He runs his business from his converted garage apartment, which he could rent out for $300 a month if he wasn't using it as a home office. He must purchase office supplies worth $75 a month, and his monthly electricity bill has increased by $50 now that he is working out of his home office.
After six months of working from home, Barney has earned an average of $12,000 per month.

a. What are Barney's average monthly accounting profits?

Barney decides to quit his job as a corporate accountant, which pays $10,000 a month, and goes into business for himself as a certified public accountant.
He runs his business from his converted garage apartment, which he could rent out for $300 a month if he wasn't using it as a home office. He must purchase office supplies worth $75 a month, and his monthly electricity bill has increased by $50 now that he is working out of his home office.
After six months of working from home, Barney has earned an average of $12,000 per month.

b. What are Barney's average monthly economic profits?

A business owner makes 50 items by hand in 40 hours. She could have earned $20 an hour working for someone else. Her total explicit costs are $200. If each item she makes sells for $15, her economic profit equals:

A young Thomas Edison produces and sells 20 light bulbs a week in his dorm room. The parts for each light bulb cost $2.00. He sells each light bulb for $5.00. General Electric offers Thomas an executive job that pays $50.00 a week. Thomas's weekly economic profit from making light bulbs is equal to:

Estella decides to set up a lemonade stand on a hot summer day. Before long, Estella's friends all decide they would like to help. The table below shows what happens to the number of glasses of lemonade Estella and her friends can make in an hour.

d. How many additional glasses of lemonade can Estella produce if she has one friend help her make lemonade instead of making lemonade by herself?

Estella decides to set up a lemonade stand on a hot summer day. Before long, Estella's friends all decide they would like to help. The table below shows what happens to the number of glasses of lemonade Estella and her friends can make in an hour.

e. How many additional glasses of lemonade can Estella produce if she has five friends help her rather than having four friends help her?

Estella decides to set up a lemonade stand on a hot summer day. Before long, Estella's friends all decide they would like to help. The table below shows what happens to the number of glasses of lemonade Estella and her friends can make in an hour.

f. If Estella has four friends help her, on average how many glasses of lemonade can each her and her friends make per hour?

The downward-sloping portion of the long-run average cost curve is a result of:

A firm finds that whether it produces 30,000 vases or 40,000 vases, its average total cost is $180. This observed pattern might be explained by:

Which of the following markets is most likely to be perfectly competitive?

Which of the following markets is most likely to be perfectly competitive?

What are the likely reason(s) that the market for electricity is not perfectly competitive? Select all that apply.

What are the likely reason(s) that the market for dress shirts is not perfectly competitive? Select all that apply.

Bobby decides to sell lemonade on a hot summer day. If Bobby sells 20 glasses of lemonade for $0.20 per cup, and his average total cost is $0.17, what are Bobby's economic profits for the day?

Which of the following suppliers is most likely to be a monopolist?

Which of the following scenarios best represents the pricing behavior of a monopolist?

If a monopolist is able to increase the amount of product she sells from 400 to 420 units by lowering the price of that product from $50 to $45, her marginal revenue is:

A price-discriminating monopolist can increase profits by:

Which of the following best represents the pricing behavior of firms in a monopolistically competitive industry?

What is one difference between a firm in a perfectly competitive industry and a firm in a monopolistically competitive industry?

What is one difference between a firm in a perfectly competitive industry and a firm in a monopolistically competitive industry?

Oligopolies are considered to be:

A firm is operating in the United States with only two other competitors in the industry.

a. It is likely this industry would be characterized as:

A firm is operating in the United States with only two other competitors in the industry.

b. Firms in this industry will likely earn:

A firm is operating in the United States with only two other competitors in the industry.

c. If foreign firms begin supplying the product, increasing the number of competitors, it is likely that:

Which of the following best represents the pricing behavior of firms in an oligopolistic market?

Which of the following characteristics differentiates a firm in an oligopolistic market from a firm in a perfectly competitive market?

Which of the following is an example of an oligopolistic market with a standardized product?

Which of the following is an example of an oligopolistic market with a differentiated product?