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1. 

(03.01 MC)

The following table shows the production function for a firm.
 

Number of workersAverage productivity
16
28
39
49.25
59.30
69.32

Which worker represents the first decline in marginal productivity? (2 points)

 3rd
 4th
 5th
 6th
 Productivity increases across the range given

2. 

(03.01 MC)

The following table gives the marginal productivity for up to six dishwashers at a restaurant.

 

Number of DishwashersMarginal Product
14
25
36
47
58
66.7


What is the average product of hiring five workers? (2 points)

 2
 3
 4
 5
 6

3. 

(03.02 MC)

Use the graph to answer the question. (2 points)



The shift from MC1 to MC2 illustrates variable costs ________ and total costs ________.

 increasing; decreasing
 increasing; increasing
 decreasing; decreasing
 remaining constant; increasing
 remaining constant; decreasing

4. 

(03.02 MC)

If a firm has fixed costs of $50 and variable costs of $100 at a production level of 5 units of output, then the total cost to produce 5 units will be (2 points)

 $50
 $150
 $750
 $800
 $5,500

5. 

(03.03 MC)

Use the graph to answer the question. (2 points)

Image transcription text

10 7 Long Run Average Total Costs 6 A Cost D A B W C N 1 2 3 4 5 6 7 Output 8 9 1010 9 8 Long Run Average Total Costs 6 A D Cost B C 1 2 3 4 5 6 7 8 Output 9 10

... Show more


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

 constant returns; constant
 economies of scale; increasing
 economies of scale; constant
 diseconomies of scale; increasing
 diseconomies of scale; decreasing

6. 

(03.03 MC)

If a firm is operating at a point on its long-run average total cost curve where the slope is negative, it is (2 points)

 experiencing increasing returns to scale
 experiencing constant returns to scale
 experiencing decreasing returns to scale
 achieving efficient scale
 making progressively less as it increases its inputs

7. 

(03.04 MC)

A firm's implicit costs are $10,000, explicit costs are $5,000, and its total revenue is $10,000. This firm is earning (2 points)

 normal accounting profit
 positive accounting profit of $5,000
 positive economic profit of $5,000
 normal economic profit
 negative accounting profit of $5,000

8. 

(03.04 MC)

A firm is earning an accounting profit of $5,000. Its implicit costs are $3,000, explicit costs are $8,000, and its economic profit is $2,000. What must its total revenue be? (2 points)

 $7,000
 $10,000
 $13,000
 $18,000
 Indeterminate

9. 

(03.05 MC)

If a firm is maximizing its profit and is earning positive economic profit, which of the following must be true? (2 points)

 Average total cost < price; marginal cost = marginal revenue
 Average total cost > price; marginal cost = marginal revenue
 Average total cost < average revenue; marginal cost > marginal revenue
 Total cost > total revenue; marginal cost > marginal revenue
 Total cost = total revenue; marginal cost > marginal revenue

10. 

(03.05 MC)

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? (2 points)

 The firm can increase output to decrease losses.
 The firm's average revenue equals the marginal cost.
 The firm can decrease output to reduce average total cost.
 The firm's marginal cost exceeds its average total cost.
 The firm's demand curve is downward sloping.

11. 

(03.06 MC)

The graph below shows the marginal revenue, marginal cost, and average total cost at different quantities for a firm in a perfectly competitive market. (2 points)



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

 $1$10
 $11$20
 $21$40
 $41$50
 Above $50

12. 

(03.06 MC)

Excelsia is a firm in a perfectly competitive industry. At its profit-maximizing level of output, average total cost is not minimized and its variable cost is higher than its price. What will Excelsia decide to do? (2 points)

 Operate in the short run but leave the market in the long run
 Change output to meet the firm's average total cost minimum
 Shut down in the short run
 Increase price until the firm is earning normal profit
 Decrease output until the firm is earning normal profit

13. 

(03.07 MC)

Consider the following cost schedule for a firm.

 

QuantityMarginal CostAverage Total CostAverage Variable Cost
10$12$32$24
15$14$30$20
20$16$28$16
25$26$26$20
30$30$28$24
35$40$32$30



What is the economic profit or loss for a perfectly competitive firm if the market price is $26? (2 points)

 0
 $20
 −$20
 $150
 −$150

14. 

(03.07 MC)

Which of the following would disqualify a firm's market from being considered perfectly competitive? (2 points)

 The firm has no market power.
 The firm sells a product that is indistinguishable from its competitors.
 The firm discovers a production cost-saving measure that competitors do not know.
 The number of firms increases.
 The minimum efficient scale of the market goes from a very high to a lower level of output.

15. 

(03.07 MC)

Use the graph to answer the question below. The quantity is measured in thousands of units. (2 points)

Image transcription text

$40 MC $30 ATC AVC Price $20 P $10 A 0 2 4 5 6 7 Quantity 9

... Show more


What will this firm decide to do in the long run?

 It will stay in the market because the price is above its AVC at its profit-maximizing output.
 It will leave the market because the price is below its ATC at its profit-maximizing output.
 It will increase its price to point B to earn normal profit.
 It will increase its output until its profit-maximizing output level is equal to B.
 Insufficient data to determine.

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