# problemset_answerkeyMidterm 3 practice - Problem Set ECO...

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Problem Set Name: ______________________ ECO 303 Spring 2008 ID: _________________________ The problem set does not include questions before midterm2 and the questions from the presentation. Multiple Choices 1. An industry in which any potential entrant has access to the same technology and that existing firms have is a) Open entry b) Restricted market c) Free entry d) Profit maximization 2. Suppose Joe starts his own business. In the first year the business earns \$100,000 in revenue and incurs \$50,000 in explicit costs. In addition, Joe has a standing offer to come work for his brother for \$100,000 per year. Joe’s accounting profit is _________ and Joe’s economic profit is __________. a) \$25,000 and \$25,000 b) \$-25,000 and \$25,000 c) \$50,000 and \$-50,000 d) \$50,000 and \$25,000 3. A fixed cost that the firm cannot avoid if it shuts down and produces zero out put is a) Non-sunk field cost b) Avoidable cost c) Equilibrium cost d) Sunk field cost 4. Sometimes a firm will continue to operate even if that firm incurs short-run negative profits (losses). Which of the following characterizes this situation? a) . PM CA C == b) . V C c) where but C = P AVC > PA C < . d) where . C = C > 5. Suppose that a market is initially in equilibrium. The initial demand curve is . The initial supply curve is 90 P =− d Q 2 s PQ = . Suppose that the government imposes a \$3 tax on this market. What are the government receipts from the tax?

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## This note was uploaded on 05/14/2008 for the course ECO 303 taught by Professor Yunshanchan during the Spring '08 term at SUNY Stony Brook.

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problemset_answerkeyMidterm 3 practice - Problem Set ECO...

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