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Midterm 2 - The Colorado College Department of Economics...

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1 The Colorado College Department of Economics and Business Block 5: Principles of Microeconomics Block 5 Econ 151 Midterm # 2 -- Time: 2 hours and 30 minutes. Do all 4 questions Please be clear and precise with the answers. Write and sign you follow the CC Honor Code. Turn in question paper along with answer booklet. 1) (a) Distinguish between the following terms: (i) Average and Marginal cost. (ii) Economic profits and accounting profits. (2x2.5=5 points) (b) Consider the following long-run total cost for three different firms: Quantity 1 2 3 4 5 6 7 Firm A $60 $70 $80 $90 $100 $110 $120 Firm B 11 24 39 56 75 96 119 Firm C 21 34 49 66 85 106 129 Does each of these firms experience economies of scale or diseconomies of scale. Explain, showing appropriate calculations. (10 points) 2) (a) Consider the following cost information for a pizzeria: Quantity Total Cost Total Variable Costs 0 $300 $0 1 450 150 2 490 190 3 520 220 4 550 250 5 590 290 6 640 340 (i) What is the total fixed cost? (2 points) (ii) Construct a table in which you calculate the MC using the information on total cost.
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