ECON-102-Fall-2012-Exam-3-Version_A_and_C

Reduce output c keep output the same d produce more

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: rts. A friend of yours tell you that since demand for t- shirts in your area is ELASTIC, you should DECREASE the price to increase profits. Should you follow your friends advice? a. yes b. no c. maybe d. only if you know for sure market demand is Inelastic 4 ECON 102 NAME: _______________________ FALL 2012 EXAM- 3 VERSION A 14. If a perfectly competitive firm sells 50 units of output at a price of $20 per unit, its marginal revenue is: a. $100. b. $20. c. more than $100. d. $more than $20. e. None of the other choices is correct. 15. Zoe's Bakery operates in a perfectly competitive industry. Suppose that when the market price is $10, the profit- maximizing output level of pastries is 80 units, with average total cost of $7, and average variable cost of $5. From this we know Zoe's marginal cost is ________, and her short- run profits are ________. a. $5; $240 b. $10; $800 c. $10; $240 d. $1; $300 e. Not enough information to answer 16. In the perfectly competitive guidebook industry, the market price is $20. A firm is currently producing 20,000 guidebooks; average total cost is $50, marginal cost is $25, and average variable cost is $10. To increase profits the firm should: a. raise the price of guidebooks b. reduce output c. keep output the same d. produce more gu...
View Full Document

This note was uploaded on 01/27/2014 for the course ECON 102 taught by Professor Kim during the Fall '08 term at University of Illinois, Urbana Champaign.

Ask a homework question - tutors are online