__172.20.40.61_Materials_jvazquez-0032_0.ECON_102_-_Exam_3_-_Form_A (1)

__172.20.40.61_Materials_jvazquez-0032_0.ECON_102_-_Exam_3_-_Form_A (1)

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ECON 102 2011 Professor Jose J Vazquez Exam-3 FORM A Please choose the best answer. For all questions, only consider the change(s) implied by the question while holding “all other things equal”. PLEASE READ ALL QUSTIONS CAREFULLY; MANY OF THEM ARE NOT EXACTLY THE SAME AS THE PRACTICE QUESTIONS. 1. Say you earn some extra money by offering tutoring services for ECON 102. Currently you are spending 5 hours a week in your tutoring business. If you work in a perfectly competitive tutoring market, then you would exit the industry in the long-term if economic profits: a. negative b. positive c. zero 2. Say you earn some extra money by offering tutoring services for ECON 102. If you are currently charging $10, and it cost you $12 extra (time, etc) to take on your last client, then to increase profits you should (assuming the tutoring market is perfectly competitive): a. continue to see the same number of clients. b. get rid of some of your clients. c. look for more clients. d. quit tutoring once for all 3. You have the following operating costs: i) Salary you could make bartending = $12/hr ii) Internet connection = $5/hr (1-year contract) If you charge $15/hr for your services, then you make ________ of _________ profits on every hour you provide of tutoring. a. $-2, economic b. $7, economic c. $-17, accounting d. $-2, accounting 4. Suppose that a firm in a competitive market is currently maximizing its short-run profit at an output of 50 units. If the current price is $9, the marginal cost of the 50th unit is $9, and the average total cost of producing 50 units is $4, what is the firm's profit? a. $0 b. $200 c. $250 d. $450
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5. Cold Duck Airlines flies between Tacoma and Portland. The company leases planes on a year-long contract at a cost that averages $450 per flight. Other costs (fuel, flight attendants, opportunity costs, etc.) amount to $500 per flight. Currently, Cold Duck's revenues are $1,000 per flight. All prices and costs are expected to continue at their present levels. If it wants to maximize profit, Cold Duck Airlines should a. drop the flight immediately. b. continue the flight.
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__172.20.40.61_Materials_jvazquez-0032_0.ECON_102_-_Exam_3_-_Form_A (1)

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