1 Midterm Review
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Number of Cakes VC MC AVC FC TC ATC 50 0 1 30 2 50 3 25 4 155
Table 11.3 1) Table 11.3 presents the cost schedule for Candy's Cakes. If Candy produces zero cake, Candy's total costs are: A) $0. B) $50. C) $150 D) $100. 2) Table 11.3 presents the cost schedule for Candy's Cakes. If Candy produces one cake, Candy's total variable costs are: A) $80. B) $30. C) $50. D) $0. 3) Table 11.3 presents the cost schedule for Candy's Cakes. If Candy produces three cakes, Candy's marginal costs are: A) $41.67. B) $75. C) $0. D) $25. 4) Table 11.3 presents the cost schedule for Candy's Cakes. If Candy produces two cakes, Candy's marginal cost is: A) $25. B) $20. C) $0. D) $50.
5) Figure 12.1 shows the cost structure of a firm in a perfectly competitive market. If the firm's fixed cost increases by 3,000 due to a new government regulation, A) the average total cost curve shifts upward. B) the marginal cost curve shifts upward. C) the average variable cost curve shifts upward. D) none of the above
6) Figure 12.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $40 and the firm is currently producing the profit maximizing output level, its total fixed cost is: A) $2,800. B) $5,200. C) $7,200. D) $9,000. 7) Figure 12.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $40 and the firm is currently producing the profit maximizing output level, the firm's profit is: A) $7,200. B) $9,000. C) $27,000. D) $36,000. 8) Figure 12.1 shows the cost structure of a firm in a perfectly competitive market. If the firm's fixed cost increases by 3,000 due to a new government regulation, A) the profit maximizing level of output increases. B) the profit maximizing level of output remains the same. C) the profit maximizing level of output decreases. D) none of the above 9) Figure 12.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $40, the firm's profit maximizing output level is: A) 500. B) 650. C) 900. D) 1,200. 10) Figure 12.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $40 and the firm is currently producing the profit maximizing output level, its total variable cost is: A) $12,500. B) $14,300. C) $19,800. D) $27,000.
11) Suppose that Figure 13.3 shows a monopolist's demand curve, marginal revenue, and its costs. The monopolist would maximize its profit by producing a quantity of: A) 30 units. B) 50 units. C) 60 units. D) There is no sufficient information. 12) Suppose that Figure 13.3 shows an industry's market demand, its marginal revenue, and the production costs of a representative firm. If industry the was perfectly competitive, a representative firm would produce a quantity of: A) 30 units. B) 50 units. C) 60 units. D) There is no sufficient information.
13) Suppose that Figure 13.3 shows an industry's market demand, its marginal revenue, and the production costs of a representative firm. If the industry was perfectly competitive, a representative firm would charge a price of: A) $35. B) $25. C) $20. D) $16. 14) Suppose that Figure 13.3 shows an industry's market demand, its marginal revenue, and the production costs of a representative firm. If the industry was perfectly competitive, a representative firm's profit would be: A) $1,250. B) $450. C) $250. D) There is no sufficient information. 15) Suppose that Figure 13.3 shows a monopolist's demand curve, marginal revenue, and its costs. At the profit maximizing output level, the monopolist's profit would be: A) $730. B) $570. C) $320. D) $150. 16) Suppose that Figure 13.3 shows a monopolist's demand curve, marginal revenue, and its costs. The monopolist would maximize its profit by charging a price of: A) $35. B) $25. C) $20. D) $16. 17) Refer to Figure 13.3. The deadweight loss associated with the monopoly would be represented by the area: A) abe. B) ace. C) ade. D) efg.
18) Refer to Figure 13.3. If the market was perfectly competitive, the consumer surplus would be: A) $850. B) $625. C) $300. D) $100. 19) Refer to Figure 13.3. If the market was a monopoly, the consumer surplus would be: 19) ______ A) $450. B) $300. C) $225. D) $100.
20) Figure 14.4 shows demands and costs for a monopolistically competitive firm. When the firm's demand curve shifts from 1 to 2 and to 3, in the long-run we would expect: A) the firm to charge a price equal to its marginal cost. B) the firm to produce at the lowest average cost. C) the firm to earn a zero economic profit. D) the firm to increase its output level.
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21) Figure 14.4 shows demands and costs for a monopolistically competitive firm. When the firm's demand curve shifts from 1 to 2 and to 3, A) the number of firms in the market is increasing. B) the firm's marginal revenue curve also shifts to the left. C) the firm's average cost of production is increasing. D) all of the above 22) Figure 14.4 shows demands and costs for a monopolistically competitive firm. When the firm's demand curve shifts from 1 to 2 and to 3, A) the firm's economic profit remains the same. B) the firm's average cost at the profit maximizing output level is decreasing. C) the firm's marginal cost at the profit maximizing output level is increasing. D) the firm's marginal revenue at the profit maximizing output level is decreasing. 1) 2) 3) 4) 5) B B D B A
D
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6) C 7) B 8) B 9) C 10) C 11) 12) 13) 14) 15) 16) 17) 18) 19) 20) A B B D B A C B C C
21) D 22) C