Ask Microeconomics Expert

Question 1:

Suppose a firm operating in pure competitive industry. The firm maximizes its profit when:

Units of output produced: 20 units

Marginal Revenue (MR) = Marginal Cost (MC) = Price (P) = $50

Average Fixed Cost (AFC) = $15

Average Variable Cost (AVC) = $35

1. What is the average total cost (ATC)? 
2. Does the firm realize a profit or a loss and why? 
3. Will the firm produce or shut-down its business and why? 
4. What is the profit or loss per unit? 
5. What is firm''s total profit or total loss?

Question 2: 

1. Suppose a firm''s total revenue is $750 when producing 30 units.

a) Determine the price per unit if the given firm is operating in pure competitive market.

b) What are the marginal and average revenues if the firm chooses to produce one more unit?

Question 3: 

1075_Determine the price per unit.png

1. Suppose a firm''s total revenue is $500 when producing the price per unit is $25.

a) Determine the quantity produced by the firm.

b) What are the average and the marginal revenues if the firm chooses to produce one more unit?Question 4:(15%)

Question 4:

You are given the following curves that represent a firm operating in pure competitive industry:

2361_Determine the price per unit1.png


1. Label the above four curves?
2. Determine graphically the units produced when the firm maximizes its profits.
3. Will the firm realize profit or loss and why?
4. Will the firm continue to produce or shut down and why?
5. Determine graphically the firm's profit or loss graphically.
6. Determine graphically the firm's average fixed cost (AFC) when it maximizes its profit?

Question 5:

1. What are the degrees of influence firms can have over price in a pure monopoly and monopolistic competitive markets.
2. Suppose a firm's total revenue is $500 when producing the price per unit is $25.
a) Determine the quantity produced by the firm.
b) What are the average and the marginal revenues if the firm chooses to produce one more unit?

Multiple Choice Questions:

1. A firm stands to gain by operating instead of shutting down as long as ________ sufficiently covers ________.
A) Price; average variable cost
B) Price; average fixed cost
C) Total revenue; total fixed costs
D) Operating profit; economic profit

2. If TR > TC, a firm would ________ in the short run and ________ in the long run.
A) Operate; expand
B) Operate; contract
C) Shut down; expand
D) Shut down; contract

3. We can call a profit-maximizing strategy a loss-minimizing strategy when a perfectly competitive firm produces where
A) AVC < P < ATC.
B) P > ATC.
C) P = ATC.
D) MR = MC < P.

4. If a firm's operating profit is $0, then
A) TR equals TC.
B) TR equals TVC.
C) TR equals TFC.
D) TFC is zero.

5. Economists usually assume that labor is ________ input in the ________ run.
A) A fixed; short
B) A fixed; long
C) A variable; short
D) Part fixed and part variable; long

6. Amy spends $6,000 on remodeling a storefront that she then opens as a take-out deli. After opening her deli her business is terrible and she needs an additional $2,000 to keep the deli open. Which of the following is TRUE?
A) The $6,000 Amy spent on remodeling represents a part of the total variable cost of her business.
B) The $6,000 Amy spent on remodeling represents a sunk cost of her business.
C) The $2,000 Amy needs to keep the deli open represents her marginal costs of production.
D) The $2,000 Amy needs to keep the deli open represents her total fixed costs.

7. A firm ________ if it earns zero economic profit.
A) Earns a negative rate of return
B) Will leave the industry
C) Earns a positive but below normal rate of return
D) Earns exactly a normal rate of return

8. In the short run, a firm
A) Has at least one fixed factor of production.
B) Cannot enter an industry where positive profits are being earned.
C) Can exit and industry and all of its factors of production are variable.
D) Both (A) and (B) are correct.

9. Firms must make all of the following decisions EXCEPT
A) How much output to supply.
B) Which production technology to use.
C) How much of each input to demand.
D) What price to charge for its output.

10. To determine the optimal method of production for a good or service, a firm needs to know
A) The market price of output.
B) The technologies of production that are available to the firm.
C) The prices of inputs.
D) All of the above are correct.

11. The fact that good substitutes are available is the feature that differentiates monopolistic competition from:

A) Monopoly.
B) Perfect competition.
C) All of the other market structures.
D) None of the other market structures. Any industry has good substitutes for the good it produces.

12. Refer to the figure below and select the best answer choice. Assume that the firm is producing 600 units. What should the firm do in order to maximize profit?

 

1778_Determine the price per unit2.png


A) The firm should maintain output at 600 units, because at this output level, marginal revenue is greater than marginal cost, marginal cost is minimized, and price is the highest.
B) The firm should increase the level of output because at 600 units, marginal revenue is greater than marginal cost.
C) The firm should increase output because at 600 units price is above marginal cost.
D) The firm should increase the level of output until it reaches the minimum average cost.

Use the information provided in Figure 7.4 below to answer the questions that follow.

161_Determine the price per unit3.png

Figure 7.4

13. Refer to Figure 7.4. The marginal product of the second worker is
A)10.
B)16.
C)20.
D)32.
14. Refer to Figure 7.4. The marginal product of the fourth worker is
A)5.
B)8.
C)50.
D)55.

15. Refer to Figure 7.4. The marginal product of the sixth worker is
A)-50.
B)-5.
C)5.
D)8.33.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91396854
  • Price:- $50

Priced at Now at $50, Verified Solution

Have any Question?


Related Questions in Microeconomics

Question show the market for cigarettes in equilibrium

Question: Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in public. Label the equilibrium private market price and quantity as Pm and Qm. Add whatever is needed to the mode ...

Question recycling is a relatively inexpensive solution to

Question: Recycling is a relatively inexpensive solution to much of the environmental contamination from plastics, glass, and other waste materials. Is it a sound policy to make it mandatory for everybody to recycle? The ...

Question consider two ways of protecting elephants from

Question: Consider two ways of protecting elephants from poachers in African countries. In one approach, the government sets up enormous national parks that have sufficient habitat for elephants to thrive and forbids all ...

Question suppose you want to put a dollar value on the

Question: Suppose you want to put a dollar value on the external costs of carbon emissions from a power plant. What information or data would you obtain to measure the external [not social] cost? The response must be typ ...

Question in the tradeoff between economic output and

Question: In the tradeoff between economic output and environmental protection, what do the combinations on the protection possibility curve represent? The response must be typed, single spaced, must be in times new roma ...

Question consider the case of global environmental problems

Question: Consider the case of global environmental problems that spill across international borders as a prisoner's dilemma of the sort studied in Monopolistic Competition and Oligopoly. Say that there are two countries ...

Question consider two approaches to reducing emissions of

Question: Consider two approaches to reducing emissions of CO2 into the environment from manufacturing industries in the United States. In the first approach, the U.S. government makes it a policy to use only predetermin ...

Question the state of colorado requires oil and gas

Question: The state of Colorado requires oil and gas companies who use fracking techniques to return the land to its original condition after the oil and gas extractions. Table 12.9 shows the total cost and total benefit ...

Question suppose a city releases 16 million gallons of raw

Question: Suppose a city releases 16 million gallons of raw sewage into a nearby lake. Table shows the total costs of cleaning up the sewage to different levels, together with the total benefits of doing so. (Benefits in ...

Question four firms called elm maple oak and cherry produce

Question: Four firms called Elm, Maple, Oak, and Cherry, produce wooden chairs. However, they also produce a great deal of garbage (a mixture of glue, varnish, sandpaper, and wood scraps). The first row of Table 12.6 sho ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As