Quiz 7- econ 221

Name: ________________________ Class: ___________________ Date: __________

ID: A

quiz 7
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.

The first picture below depicts the cost curves for a representative firm in this perfectly competitive industry. Initially, there are 100 firms. The second picture depicts market demand.

Marginal Cost

10

ATC

8

AVC

6

4

2

200

400

600

800

1000

1200

1400

10

8

6

4

2
Dem and

20000

____

40000

60000

80000 100000 120000 140000

1. Suppose that the firm produces 300 units of output, how much are their total costs?
a. 2700
c. 3600
b. 3000
d. 4500

1

Name: ________________________
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ID: A

2. What is the short-run equilibrium price?
a. 2
d. 5
b. 3
e. 6
c. 4
3. At the short-run equilibrium price, what is the quantity produced by each firm?
a. 600
c. 800
b. 700
d. 900
4. At the short-run equilibrium price, what is per-firm profit
a. zero
c. -1800
b. -2500
d. 4000
5. In the long-run, what will happen to this industry?
a. Firms will enter. Supply will shift to the c. Firms will exit. Supply will shift to the right and price will fall. left and price will rise.
b. Firms will exit. Supply will shift to the
d. Nothing, this is already a long-run right and price will fall. equilibrium. 6. What is the long-run equilibrium profit?
a. zero
c. 1350
b. 1800
d. 2000
7. What is output per firm at the long-run equilibrium price?
a. 200
c. 600
b. 500
d. 800
8. In the long-run, how many firms will be in this industry?
a. 50
c. 100
b. 80
d. 120
Q

1
2
3
4

Fixed
Cost

Variable
Cost

Total
Cost

Marginal
Cost

Average
Fixed
Cost

Average
Variable
Cost

Average
Total
Cost

240
100
100
40

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9. What is the marginal cost of the first unit of output?
a. 60
c. 100
b. 80