Micro Econ Homework 4

3 September 2022
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question
Which of the following is not an explicit cost? a. salaries b. sales taxes c. the cost of utilities, such as gas and electricity d. insurance premiums e. the value of a firm owner's time
answer
E
question
If Ripco owns the building where it operates, then if a. the firm pays no rent, there is no opportunity cost b. the firm does not rent the building to anyone else, there is no opportunity cost c. the firm pays no rent, there is an opportunity cost d. its usage of the building precludes it from renting to anyone else, there is an opportunity cost e. the firm could use the building for other things, there is no opportunity cost
answer
D
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Which of the following are implicit costs for a typical firm? a. insurance costs b. electricity costs c. opportunity costs of capital owned and used by the firm d. cost of labor hired by the firm e. the cost of raw materials
answer
C
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Cash payments for steel to be used in production would be an example of a. sunk costs b. fixed costs c. explicit costs d. implicit costs e. entrepreneurial costs
answer
C
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A firm's opportunity costs of using resources provided by the firm's owners are called a. sunk costs b. fixed costs c. explicit costs d. implicit costs e. entrepreneurial costs
answer
D
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Marge opens an oxygen bar in a building she owns. She used to rent the building to her brother in law for $10,000 a year. To open the oxygen bar, Marge quit her job as a physician assistant, which paid $80,000 a year. As a bar owner, Marge has to pay $40,000 a year wages for her bartender, spend $25,000 a year for supplies, and the utilities bill is $9,500 a year. To cover the start-up costs, she used up all of her savings which earned $4,600 in interest. What are her implicit costs? a. $10,000 b. $90,000 c. $84,600 d. $94,600 e. $74,500
answer
D
question
Marge opens an oxygen bar in a building she owns. She used to rent the building to her brother in law for $10,000 a year. To open the oxygen bar, Marge quit her job as a physician assistant, which paid $80,000 a year. As a bar owner, Marge has to pay $40,000 a year wages for her bartender, spend $25,000 a year for supplies, and the utilities bill is $9,500 a year. To cover the start-up costs, she used up all of her savings which earned $4,600 in interest. What are her explicit costs? a. $40,000 b. $49,500 c. $84,600 d. $94,600 e. $74,500
answer
E
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The difference between a firm's total revenue and what must be paid to attract resources from their best alternative use is called a. total revenue b. utility c. economic profit d. cost e. production efficiency
answer
C
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Which of the following would not appear on a firm's accounting statement? a. sunk costs b. fixed costs c. explicit costs d. implicit costs e. insurance costs
answer
D
question
Marge opens an oxygen bar in a building she owns. She used to rent the building to her brother in law for $10,000 a year. To open the oxygen bar, Marge quit her job as a physician assistant, which paid $80,000 a year. As a bar owner, Marge has to pay $40,000 a year wages for her bartender, spend $25,000 a year for supplies, and the utilities bill is $9,500 a year. To cover the start-up costs, she used up all of her savings which earned $4,600 in interest. Total annual revenue at the end of the year is $450,000. Marge's accounting profit is: a. $450,000 b. $375,500 c. $169,100 d. $280,900 e. $410,000
answer
B
question
Marge opens an oxygen bar in a building she owns. She used to rent the building to her brother in law for $10,000 a year. To open the oxygen bar, Marge quit her job as a physician assistant, which paid $80,000 a year. As a bar owner, Marge has to pay $40,000 a year wages for her bartender, spend $25,000 a year for supplies, and the utilities bill is $9,500 a year. To cover the start-up costs, she used up all of her savings which earned $4,600 in interest. Total annual revenue at the end of the year is $450,000. Marge's economic profit is: a. $450,000 b. $375,500 c. $74,500 d. $280,900 e. $410,000
answer
D
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Accounting profit is a. always less than economic profit b. never less than economic profit c. equal to economic profit if a normal profit is earned d. less than economic profit only when implicit costs are greater than explicit costs e. greater than economic profit only when implicit costs are greater than explicit costs
answer
B
question
Suppose a soccer coach has been making $25,000 per year but gives up his coaching job in order to make lace doilies. If his revenue from the sale of these doilies is $50,000 and his materials cost $20,000, then his economic profit is a. $5,000 b. $25,000 c. $30,000 d. $50,000 e. $80,000
answer
A
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Total Revenue $100,000 Assistant's salary $ 20,000 Material & equipment 15,000 Forgone salary 30,000 Forgone interest 1,000 Foregone building rental 10,000 Sally owns a small business that she operates in a small building she owns. Given the information in Exhibit 7-1, Sally's economic profit is a. $80,000 b. $50,000 c. $65,000 d. $35,000 e. $24,000
answer
E
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Inputs that can be increased or decreased in the short run are called a. fixed inputs b. variable inputs c. economic inputs d. accounting inputs e. normal inputs
answer
B
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Which of the following is most likely to be a fixed resource for Paul's Country Fresh Pies, Inc.? a. berries b. flour c. bakers d. eggs e. ovens
answer
E
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The short run is a period of time a. equal to or less than six months b. during which all resources may be varied c. during which all resources are fixed d. during which at least one resource is fixed e. during which at least one resource may be varied
answer
D
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The long run is a period of time a. during which at least one resource is fixed b. during which all resources are variable c. during which all resources are fixed d. less than one year e. greater than one year
answer
B
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The additional output obtained by adding another unit of labor to the production process is called a. the marginal cost of labor b. the average output of labor c. a variable cost d. the marginal product of labor e. the marginal utility of labor
answer
D
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Labor Total product (pairs of shoes) 0 0 1 20 2 50 3 75 4 80 5 75 Given the information in Exhibit 7-2, what is the marginal product of the third unit of labor? a. 45 pairs of shoes b. 25 pairs of shoes c. 15 pairs of shoes d. $45 e. $25
answer
B
question
Given the information in Exhibit 7-2, at what point do diminishing marginal returns set in? a. before the first unit of labor b. between the first and second units of labor c. between the second and third units of labor d. between the third and fourth units of labor e. between the fourth and fifth units of labor
answer
C
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Given the information in Exhibit 7-2, at what point do negative marginal returns set in? a. before the first unit of labor b. between the first and second units of labor c. between the second and third units of labor d. between the third and fourth units of labor e. between the fourth and fifth units of labor
answer
E
question
Resource Total (Labor) product(T-shirts) 0 0 1 20 2 42 3 62 4 72 5 74 6 68 Given the information in Exhibit 7-12, the production of T-shirts exhibits increasing marginal returns to labor for: a. The first worker only b. The first two workers c. The first three workers d. The first four workers e. The first five workers
answer
B
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Number of workers Total output 0 0 1 10 2 40 3 100 4 140 5 160 6 170 7 150 In Exhibit 7-3, the marginal product of the third worker is a. 20 b. 100/3 c. 60 d. 50 e. 140
answer
C
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Units of labor Total product Marginal product 0 0 - 1 6 6 2 14 8 3 24 10 4 36 12 5 42 6 6 46 4 In Exhibit 7-4, marginal returns increase with the hiring of up to _____ worker(s). a. one b. two c. three d. four e. five
answer
D
question
In the range of increasing marginal returns, total product is a. increasing at a constant rate b. increasing at an increasing rate c. increasing at a decreasing rate d. decreasing at an increasing rate e. decreasing at a decreasing rate
answer
B
question
For a person who owns and operates an automobile, insurance premiums are a _____ and maintenance and repairs are a _____. a. revenue; cost b. fixed cost; fixed cost c. variable cost; variable cost d. variable cost; fixed cost e. fixed cost; variable cost
answer
E
question
Jerry's ice-cream parlor is hosting Andrew's birthday party in one week. Overall, 25 to 30 people will attend the party and Andrew's costs are as follows: $200 for rent, $150 for the cake, $3 per person for customized invitations, $15 per person for the meal, $50 for decorations, and $8 per person for party favors. For simplicity, assume that Andrew is considered one of the guests and he receives an invitation too. Assuming that 25 people attend the party, the fixed cost of the party is: a. $400 b. $1,050 c. $650 d. $350 e. $250
answer
A
question
Jerry's ice-cream parlor is hosting Andrew's birthday party in one week. Overall, 25 to 30 people will attend the party and Andrew's costs are as follows: $200 for rent, $150 for the cake, $3 per person for customized invitations, $15 per person for the meal, $50 for decorations, and $8 per person for party favors. For simplicity, assume that Andrew is considered one of the guests and he receives an invitation too. Assuming that 25 people attend the party, the variable cost of the party is: a. $400 b. $1,050 c. $650 d. $350 e. $26
answer
C
question
Which of the following is not characteristic of perfect competition? a. many buyers and sellers b. brand name advertising c. standardized products d. fully informed buyers and sellers e. free entry and exit of firms
answer
B
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Which of the following markets best approximates the perfectly competitive market structure? a. automobile manufacturing b. insurance c. world commodity markets d. airlines e. manufacture of stereo equipment
answer
C
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Firms in perfect competition have no control over a. all of the following b. where to operate on their average total cost curves c. what price to charge d. how many inputs to use e. how much to produce
answer
C
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The demand curve for the output of a perfectly competitive firm is a. perfectly inelastic b. perfectly elastic c. unit elastic d. downward sloping e. nonlinear
answer
B
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In perfect competition, if one firm raises its price, a. others will follow b. that firm will increase its revenues c. that firm will lose revenues because other firms will not follow d. all consumers will be adversely affected e. the market demand curve will shift
answer
C
question
Demand Cost Price Q Q Marginal cost $60 5 1 $50 80 4 2 60 100 3 3 100 120 2 4 140 The perfectly competitive firewood market is composed of 1,000 identical consumers and 1,000 identical firms. Exhibit 8-1 shows cost data for one firm and demand data for one consumer. What is the equilibrium price? a. $60 b. $80 c. $100 d. $120 e. It is impossible to determine the equilibrium price because there is no information on market demand or supply.
answer
C
question
Demand Cost Price Q Q Marginal cost $60 5 1 $50 80 4 2 60 100 3 3 100 120 2 4 140 ____ 35. The perfectly competitive firewood market is composed of 1,000 identical consumers and 1,000 identical firms. Exhibit 8-1 shows cost data for one firm and demand data for one consumer. What is the equilibrium price? a. $60 b. $80 c. $100 d. $120 e. It is impossible to determine the equilibrium price because there is no information on market demand or supply.
answer
C
question
Quantity (widgets) Total cost (dollars) 0 $3 1 10 2 15 3 21 4 28 5 40 Exhibit 8-20 shows the cost schedule for 'No#2 widget factory'. We know that the market for widgets is perfectly competitive, and the widgets are selling for $10 each. If 'No#2 widget factory' sells 3 widgets, the total revenue is: a. $10 b. $20 c. $30 d. $21 e. $50
answer
C
question
Exhibit 8-20 shows the cost schedule for 'No#2 widget factory'. We know that the market for widgets is perfectly competitive, and the widgets are selling for $10 each. How many widgets should the factory produce to maximize its profit? a. 1 b. 2 c. 3 d. 4 e. 5
answer
D