Question

1. The following table shows the average productivity of a team of landscapers hired to landscape a new city park.

What is the marginal product of labor for the third landscaper?

A.1

B.7

C.9

D.17

E.21

2.Viridi is a price-taking firm in a perfectly competitive market. It is currently enjoying substantial positive economic profits in the short run. Assume that Viridi knows it has reached maximum efficient scale. What will happen in the long run?

A. Viridi will leave the market.

B. Other firms will enter and drive the price up, eliminating Viridi's profits.

C. Viridi will produce a higher output to increase its profit even more.

D.Viridi will decrease its price to capture a large share of the market for its product.

E. Other firms will enter and drive the price down, eliminating Viridi's profits.

3.Use the graph to answer the question

Between points C and D, the long-run average total cost curve is characterized by ________ because the firm is experiencing ________ returns to scale.

A. constant returns; constant

B. economies of scale; increasing

C. economies of scale; constant

D. diseconomies of scale; increasing

E. diseconomies of scale; decreasing

4. If a firm's explicit costs are $2,000, its implicit costs are $1,000, and its revenue is $5,000, the firm is earning

A. positive accounting profit of $2,000

B. negative accounting profit of $2,000

C. positive economic profit of $3,000

D. positive economic profit of $2,000

E. positive economic profit of $4,000

5.Use the graph to answer the question below. The quantity is measured in thousands of units.

What quantity will this firm be incentivized to produce in the short run?

A. Zero output to minimize its losses

B. Between 3,000 and 4,000 units to minimize its marginal cost

C. 5,000 units at point A in order to minimize its variable cost

D. Between 5,000 and 6,000 units, where the marginal cost equals the price

E. Approximately 5,800 units at point B to earn normal profit

6.

A firm is earning positive economic profit of $1,000. The firm's implicit costs are $2,000, its explicit costs are $4,000, and its accounting profit is $3,000. What must be its total revenue?

A. $2,000

B. $3,000

C. $4,000

D. $5,000

E. $7,000

7. The graph below shows the marginal revenue, marginal cost, and average total cost at different quantities for a firm in a perfectly competitive market.

At what market price would a firm continue to operate in the short run but leave the market in the long run?

A. $1-$10

B. $11-$20

C. $21-$40

D. $41-$50

E. Above $50

8.Which of the following describes the slope of the long-run average total cost curve when operating at efficient scale?

A. It is flat.

B. It is positive.

C. It is negative.

D. It is negative and then positive.

E. It is positive and then negative.

9.Use the graph to answer the question.

The graph illustrates that

A. the firm's fixed costs are increasing

B. the firm is producing fewer units at every cost level

C. the firm is failing to employ division of labor

D. the firm's variable and total costs are decreasing

E. the firm is experiencing increasing marginal returns

10.If a firm is maximizing its profit and is earning positive economic profit, which of the following must be true?

A. Average total cost < price; marginal cost = marginal revenue

B. Average total cost > price; marginal cost = marginal revenue

C. Average total cost < average revenue; marginal cost > marginal revenue

D. Total cost > total revenue; marginal cost > marginal revenue

E. Total cost = total revenue; marginal cost > marginal revenue

11. A firm operating in a perfectly competitive market is incurring economic losses but has minimized those losses. Assuming its average variable cost is less than its price, which of the following must be true in the short run?

A. An increase in output will decrease losses.

B. The firm's average revenue equals the marginal cost.

C.Its marginal cost is above its average revenue.

D.The firm's marginal cost exceeds its average total cost.

E. The firm's demand curve is downward sloping.

12.Which of the following would disqualify a firm's market from being considered perfectly competitive?

A. The firm has no market power.

B. The firm sells a product that is indistinguishable from its competitors.

C. The firm discovers a production cost-saving measure that competitors do not know.

D. The number of firms increases.

E. The minimum efficient scale of the market goes from a very high to a lower level of output.

13. Consider the following cost schedule for a firm.

What is the economic profit or loss for a perfectly competitive firm if the market price is $26?

A. 0

B. $20

C. −$20

D. $150

E. −$150

14. A firm has fixed costs of $100 at 10 units. If its variable costs at 15 units are $100, what must its total cost be to produce 15 units?

A. $100

B. $200

C. $250

D. $1,500

E. $2,500

A company hires workers to develop phone apps. The following table shows the marginal productivity of each worker.

What is the total product of employing the third worker?

A. 1

B. 9

C. 10

D. 27

E. 30

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