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kevin's GOLF - A- RAMA sells Bolt balls in a perfectly competity level of golf ball production . Kevin has marginal costs market price of golf balls...

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50 .
kevin's GOLF - A- RAMA sells Bolt balls in a perfectly competity
level of golf ball production . Kevin has marginal costs
market price of golf balls is $2 . Kevin should :`
I costs equal to $1 , and A VC is rising . If the
decrease the level of golf ball production ."
continue producing the current level of production*
56 d
shut down and produce no golf balls ."
57 2
57 .
Is considering adding an additional commuller inall of "'s Hope to ``co
trip is estimated to be $3000 of which $1000 are*
variable costs . The anticipated extra revenues are $180.0 . What should the company do ?*
Not add the train since the company will make a loss .\
for add the train since !"
since the loss*
be the company cannot cover its total fixed costs
Is is less than its total variable cost .\
Add the train since the marginal revenue exceeds the marginal cost .*
58 .
Sheila sells corn in a perfectly competitive market . This month Sheila rex
receives a lower price*
for a bushel of comm than she did last month . Which of the following might explain this ?\
The market demand increased for corn*
The market demand decreased for corn .
58 6
Firms exited the market .\
Sheila's costs have increased .
59 6
59 .
What is implied if P = MC > AC ?*
60 6
The market is achieving productive efficiency but is not achieving alloc*
Wiciency .
The market is achieving allocating cificiency but is not achieving productive*
elliciency .`
The market is achieving neither productive efficiency nor allocating efficiency*
The market is achieving both allocalive efficiency and productive efficiency ."
60. IT the price of a product is less than its marginal costs . then :\
society would prefer more of this product produced .
society would prefer less of this product produced .\
society would be making a profit .\
society would be making a loss ."
61 .
When a monopolist sells two units of output its total revenues are $120 . When the monopolist*
I'll's three units of output its price per unit is $50 . The monopolist's marginal revenue from*
"Iling the third unit of output is :"
9\
$37.50 .
\All of the following except one are features of patent legislation . Which is the exception ?
|1 gives a monopoly to the patent holder .\
"I creates a barrier
rier to entry .\
It guarantees that the patent hall
It is a source of monopoly power
" and development ."
a
18 8 8 8 8 8 8
9
Refer to the diagram above . What is the monopolist's profit- maximizing price and output ?"
$50 and 800
$40 and 600
$60 and 800|
$70 and 600
$75 and 450
04 .`
\Refer to the diagram above . What is the monopolist 's maximum level of total profits ?*
$6. 0.010
$8. 00`
a
$18 . 0.010
65 .
Refer to the diagram below
10 /
Price /} per unit
10
Quorfly (units per dov !
At the profit - maximizing output level for the above monopolist .`
the resource allocation is efficient in the economy since the price is less than the
highest price some buyers would be willing to pay .\
the resource allocation is efficient in the economy since the marginal revenue
equals the marginal cost .\
the resource allocation is inefficient in the coonomy since the price exceeds the
marginal cost .`
the efficiency of the resource allocation is assured since profit is maximized*
the efficiency of the resource allocation is assured since cost is minimized ."
REFER TO THE FOLLOWING TABLE WHEN ANSWERING THE NEXT S' QUESTIONS . The table*
gives the cast and demand data for a monopolist ."
\ Marginal| Average\ Marginal*
Output\ Price (})| Revenues| Costss| Costs*
109
` ` UN $ $8 8
\8 $8 8 8 8 8 8
79.2
Refer to the table above . Suppose that the monopolist is regulated and forced to charge and
allocatingly efficient price ."
ice . What will be the price and output ?*
3.03 and 4
b .
$80 and 5\
$75 and 6
Sos and 8
Refer in the cable above . Suppose that the monopolist is regulated and forced to charge and
allocatingly efficient price . "
ient price . What will be the level of profit or loss ?`
b .
loss of $25.20
67 I think it's profit but the answer
rofit of $1 2*
I caucalulated is not in the option*
profit of $60
68 6
84
Refer to the table above . Suppose that the monopolist is regulated and forced to charge a fair -
$75 an
$70 and 4\
US .
In order to practice price discrimination a firm must be in a market such that the consumers in
its market :*
all have identical tastes .\
I'll have identical price elasticities of demand
have different price elasticities of demand ."
have the same demand for its product .\
70
Suppose that each of the following goods and services are provided by a different monopoly*
In which case will it be the easiest to engage in price discrimination ?*
Uppics
haircuts
computers*
In general , firms in a cartel !
70 d
1 1 .
agree to set a price equal to marginal cost .*
71 b
lecisions .`
10 not consider the actions of the other firms in the cartel when making output*
produce levels of output exceeding the mono !
onopoly output level ."
"?`
agree to charge the price the monopolist would charge .\

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REFER TO THE TABLE ELOW WHEN ANSWERING THE NEXT 3 QUESTIONS.
Total
Total
Units
Utility
Utility
of Good A of Good B
48
97
41.
Refer to the above table. The price of Good A is $1, the price of Good B is $3, and $13 can
be spent. The rational spending rule predicts _
units of Good A and _
of Good B will be purchased.
units
4: 4
a
3; 3
-2.
Refer to the above table. The price of Good A is $2, the price of Good B remains at $3, and
$13 can be spent. The rational spending rule predicts _
units of Good A and
_ units of Good B will be purchased.
42 b
43 c
4: 3
43.
Refer to the above table. The "demand" for Good A is represented by
44 b
PASI: QA2
PA$1: QA4
PA$1: QA4
PASI: QA3
PA$2: QA4
PA$2: QA3
PA$2: QA2
PA$2: QA4
44.
Why does the demand curve slope downward?
Since the marginal utility increases with increased consumption, people will be
eager to buy more at lower prices.
Since the marginal utility decreases with increased consumption, the price must fall
in order to induce people to buy more.
Since total utility increases with increased consumption, a lower price is necessary
o encourage increased production.
Lower prices mean a lower consumer surplus which will encourage increased
consumption.
REFER TO THE TABLE BELOW WHEN ANSWERING THE NEXT 3 QUESTIONS. Below are some
production data for QUITE SIMPLE PRODUCTS LTD.
Units of Total
Labour Product
30
70
120
OUIAWN
160
216
216
47.
Refer to the table above. How many units of labour are being used when diminishing returns
first become evident?
e
cannot be determined
Refer to the table above. How many units of labour are being used when the firm's marginal
cost is at a minimum?
a.
48 e
b.
49 e
d.
50 c
49.
Refer to the table above. What is the value of average product when marginal product is zero?
ON
b.
31
27
cannot be determined
50.
Suppose you know that at the current level of production, average total cost equals marginal
cost, then you know that it is also true that:
fixed costs are zero.
verage fixed costs are increasing.
average total cost will decrease if production is increased.
average total cost is minimized at the current level of output.
51-
Suppose that in 1996 ABC Corp produced 500 million units of a good at an average cost of $2
and in 1997 ABC Corp expanded its plant capacity and produced 600 million units at an
average cost of $1.80. In this range, one can conclude that ABC Corp is experiencing:
economies of scale.
diseconomies of scale.
C.
neither economies of scale nor diseconomies of scale.
a
diminishing marginal product.
REFER TO THE DIAGRAM BELOW WHEN ANSWERING THE NEX1 4 QUESTIONS. the graph
shows the costs for a perfectly competitive producer.
VC, ATC, MC
20 30 40 50 60 70 80 90 100
Output per period
52.
Refer to the above diagram. If the price of a product is $35, what is the profit-maximizing
output? What is the total profit or loss?
O; -$10
20; $0
C
90; $900
100; $3,150
cannot be determined
e above diagram. If the price of the product is $10, what is the profit-maximizing
output? What is the total profit or loss?
0; -$45
20; -$40
30; -$20
60; $0
cannot be determined
C
Refer to the above diagram. If the price of the product is $40, what will be the average profit?
$10
$18
Sodo
$1000
cannot be determined
55.
Refer to the above diagram. Which of the following represents the firm's supply curve?
B
D
Price Qs Price Qs Price Qs Price Qs
$10 .........0 |$10......... 0 |$10.........0 |$10 .......30
$15 .........0 | $15....... 50 $15 .........0 $15 .......50
$20 .........0 $20....... 60 $20 ....... 60 $20 .......60
$25 .......70 |$25....... 70 $25 .. ..... 70 $25 .......70
$30 .......80 $30....... 80 $30 ....... 80 $30 .......80
54 b
refer to table A
55 d
refer to table B
eter to table C
r to table D

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