# Class03_28 - Practice questions: 1. Based on the data for...

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Practice questions : 1. Based on the data for the furniture market below, the 4-firm concentration ratio is ________, and the Herfindahl-Hirschman Index is ________. Firm Market Share Lexington 32 Thomasville 24 Broyhill 20 Henredon 6 La-Z-Boy 18 a. 82; 1,000 b. 94; 2.324 c. 94; 2.360 d. 100; 2,136 2. Acme Inc. is operating in a perfectly competitive market. The company can sell their product at the market price P* = \$2/unit. Based on the total output table below and the fact that the wage rate is w = \$8, what is the company’s profit-maximizing level of output? Labor (L) Total Output (Q) 1 50 2 66 3 76 4 83 5 88 a. 50 b. 76 c. 88 d. 90 1

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3. The figure below illustrates a perfectly competitive firm. If the market price is \$30 a unit, to maximize its profit (or minimize its loss) the firm should a. produce 30 units. b. produce more than 30 units. c. produce less than 30 units. d. shut down 4. Based on the figure in the problem above, what will the firm do to maximize profit if the price falls to \$15? a. produce about 25 units b. produce about 5 units c. increase the price it is charging for output d. shut down 5. Suppose a perfectly competitive market is in long-run equilibrium and then there is a
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## This note was uploaded on 04/29/2008 for the course ECON 251 taught by Professor Blanchard during the Spring '08 term at Purdue University-West Lafayette.

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Class03_28 - Practice questions: 1. Based on the data for...

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