Part A: Multiple choice questions (60 points)
1) Which of the following will NOT cause a shift in the supply of gasoline?
A) An increase in the wage rate of refinery workers
B) A decrease in the price of gasoline
C) An imp
Time: 75 Mins
Multiple Choice part: 60 pts
1) Primary difference between a perfectly competitive industry and a monopoly is
A) number of firms
B) Product homogeneity
C) Barriers to entry, which leads to different level of con
In the short run, described in part (a), price also exceeds average cost, and the firm earns profits shown
by the yellow-shaded rectangle.
In long-run equilibrium, described in part (b), price equals average
Econ 3251 HW3
Profit is maximized where = => = => =
= = =
Some firms suffer SR economic losses at P, firms will exit decreasing supply (shifting SC to left, S1 -> S2)
and price increases.
Due: Wednesday, Dec 9th
1) Draw a long run equilibrium graph for a monopolistically competitive firm.
2) Suppose that there are two firms in a duopoly market producing identical
Thus, price is decreased but quantity is not sure. It depends on supplier or demanders elasticity.
For example, below graph, increased quantity is bigger than decreased.
a) Perfect complement
Due: Wednesday, Sept 16
1) Word gets out that eating Carls Juniors chicken sandwich is injurious to health.
At the same time price of chicken decreases. Use Supply and Demand graph to
Due: Wednesday, Nov 3rd
1) Suppose a firm in a perfectly competitive industry has the following cost function,
, , = 2!
a) Write down the equation for profit maximizing quantity (Supply) fo
Due: Wednesday, Sep 30th
1) Consider the following production function
= , = !
where k is capital and l is labor used
a) Find expression for Marginal Product of Capital and Labor (M
University of Missouri
ECONOMICS 3251, THEORY OF FIRMS
ECON1014 OR 1024 OR 1051, AND MATH 1400, OR EQUIVALENT.
NOT OPEN TO ECONOMICS MAJORS.
Mr. Saroj Dhital
Quiz 1: Version 1
Time: 20 mins
1. Sugarcane is a key ingredient for producing sugar. When the price of those
(a) the demand curve for sugar would shift right.
(b) the demand curve for sugar
Time: 20 Mins
1) A firm maximizes profit by operating at the level of output where
A) average revenue equals average cost.
B) average revenue equals average variable cost.
C) total costs are minimized.
D) marginal revenue equals
Quiz 3: Version 1
Time: 20 Minutes
1) Which of the following is true about monopolistically competitive industry in the long
A) will make positive profit.
B) They are efficient, meaning they produce at a minimum ATC
C) They produce more tha