Economics and Question

Only available on StudyMode
  • Download(s) : 84
  • Published : August 12, 2012
Open Document
Text Preview
Question 1
 
Being a price taker in a market means that the seller
 
Answer
| | charges each consumer the maximum that she will be able to pay for the product.| | | has no choice but to charge the equilibrium price that results from the market supply and demand curves.| | | takes her price from her average total cost curve.|

| | sells her products at different prices to different customers.| 1 points  
Question 2
 
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. It follows that the  
Answer
| | production of the 100th unit of output increases the firm's profit by $3.| | | production of the 100th unit of output increases the firm's average total cost by $7.| | | firm's profit-maximizing level of output is less than 100 units.| | | production of the 99th unit of output must increase the firm’s profit by less than $3.| 1 points  

Question 3
 
Charlene sells cotton candy.  The cotton candy industry is competitive.  Charlene hires a business consultant to analyze her company’s financial records.  The consultant recommends that Charlene increase her production.  The consultant must have concluded that Charlene’s  

Answer
| | total revenues exceed her total accounting costs.|
| | marginal revenue exceeds her total cost.|
| | marginal revenue exceeds her marginal cost.|
| | marginal cost exceeds her marginal revenue.|
1 points  
Question 4
 
Shrimp Galore, a shrimp harvesting business in the Pacific Northwest, has a 30-year loan on its shrimp harvesting boat. The annual loan payment is $25,000 and the boat has a market (salvage) value that exceeds its outstanding loan balance. Prior to the 2008 shrimp harvesting season, Shrimp Galore's accountant predicted that at expected market prices for shrimp, Shrimp Galore would have a net loss of $75,000 dollars after paying all 2008 expenses (including the annual loan payment). In this case, Shrimp Galore should Answer

| | produce nothing and experience a loss of $25,000.|
| | produce nothing and experience a loss of $75,000.|
| | continue to operate because expected profits will rise in the future.| | | continue to operate even though it predicts a loss of $75,000.| 1 points  
Question 5
 
The next 3 questions refer to the following:
 
Total cost schedule for a competitive firm:
 
Output| Total Cost|
0| $  10|
1| $  60|
2| $  80|
3| $110|
4| $165|
5| $245|

 
 
 
 
 
 
 
 
If market price is $60, how many units of output will the firm produce? Answer
| |        Zero units of output because the firm shuts down.| | |       1 unit of output.|
| |        2 units of output.|
| |       3 units of output.|
| |        none of the above.|
1 points  
Question 6
 
If market price is $60, what is the maximum profit the firm can earn? Answer
| |        −$10|
| |       Zero profit|
| |        $75|
| |       $80|
| |        $85|
1 points  
Question 7
 
If market price is $30, how many units of output will the firm produce? Answer
| |        0, the firm shuts down|
| |       1|
| |        2|
| |       3|
| |        4|
1 points  
Question 8
 
In a perfectly competitive industry the market price is $25.  A firm is currently producing 10,000 units of output; average total cost is $28, marginal cost is $20, and average variable cost is $20.  The firm should Answer

| | raise price because the firm is losing money.|
| | keep output the same because the firm is producing at minimum average variable cost.| | | produce more because the next unit of output increases profit by $5.| | | produce less because the next unit of output decreased profit by $3.| | | shut down because the firm is losing money.|

1 points  
Question 9
 
The next two questions refer to...
tracking img