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Principles of Microeconomics Homework #2

# Principles of Microeconomics Homework #2 - Principles of...

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Principles of Microeconomics 2252 – TUWA Homework #3 Answer sheet on last page Due March 29 th , 2011 1._____Suppose that a firm produces 200,000 units a year and sells them all for \$10 each. The explicit costs of production are \$1,600,000 and the implicit costs of production are \$200,000. The firm has an accounting profit of: A. \$500,000 and an economic profit of \$200,000 B. \$400,000 and an economic profit of \$200,000 C. \$300,000 and an economic profit of \$400,000 D. \$200,000 and an economic profit of \$500,000 2._____Refer to the above table. The marginal product of the fifth unit of labor is: A. 4 units of output B. 6 units of output C. 8 units of output D. 34 units of output 3._____If average variable cost is \$74 and total fixed cost is \$100 at 5 units of output, then average total cost at this output level is: A. \$91 B. \$94 C. \$97 D. \$100 4._____Economies and diseconomies of scale explain: A. the profit-maximizing level of production. B. why the firm's long-run average total cost curve is U-shaped. C. why the firm's short-run marginal cost curve cuts the short-run average variable cost curve at its minimum point. D. the distinction between fixed and variable costs.

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5._____As the firm in the above diagram expands from plant size #1 to plant size #3, it experiences: A. diminishing returns. B. economies of scale. C. diseconomies of scale. D. constant costs. 6._____If the demand curve facing a firm is perfectly elastic, then: A. Its marginal revenue will equal price B. Its marginal revenue schedule will decrease at an increasing rate C. Its marginal revenue schedule decreases twice as fast as the demand curve
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Principles of Microeconomics Homework #2 - Principles of...

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