PS Ch 6 Solutions.doc - EC 101.03 Problem Session Chapter 6...

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EC 101.03 Problem Session: Chapter 6 Fall 2017 Sellers and Incentives 1) Which of the following examples best describes the concept of free entry? A) Jack has an old cell phone that he wants to sell. He opens an account on eBay and auctions it off. B) Purecircuit Corp. wants to expand its production, so it doubles its annual recruitment. C) To increase its market share, System Corp. decides to charge a price lower than the market price. D) The government enters the market to correct any shortage or surplus in the market for gasoline. Answer: A 2) Which of the following inputs can be changed in the short run? 3) A firm uses workers, land, and machinery for its production process. Which of the following statements is then true? 4) A firm produced 376 units with 10 workers. When the eleventh worker was hired, the output increased to 398 units. The marginal product of the eleventh worker is: 5) Which of the following refers to diminishing marginal returns? A) The revenue of a cell phone manufacturer decreased when it increased its product price. B) The additional output produced in a firm decreased as more workers were hired.
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