Question 1

Figure 8.5.2
-Refer to Figure 8.5.2 above. The shift in the marginal cost curve implies:

Accepted Answer

A)  an increase in the price of an input, which reduces the profit-maximizing level of output. 
B)  an decrease in the price of an input, which increases the profit-maximizing level of output. 
C)  a decrease in the price of an input, which shifts the marginal cost curve upward. 
D)  a deadweight loss when costs increase and output remains the same. 
A)  an increase in the price of an input, which reduces the profit-maximizing level of output. 
B)  an decrease in the price of an input, which increases the profit-maximizing level of output. 
C)  a decrease in the price of an input, which shifts the marginal cost curve upward. 
D)  a deadweight loss when costs increase and output remains the same.

Question 2

In the long-run equilibrium of a competitive market, the market supply and demand are:
Supply: P = 30 + 0.50Q
Demand: P = 100 - 1.5Q,
where P is dollars per unit and Q is rate of production and sales in hundreds of units per day. A typical firm in this market has a marginal cost of production expressed as:
MC = 3.0 + 15q.
a. Determine the market equilibrium rate of sales and price.
b. Determine the rate of sales by the typical firm.
c. Determine the economic rent that the typical firm enjoys. (Hint: Note that the marginal cost function is linear.)
d. If an output tax is imposed on ONE firm's output such that the ONE firm has a new marginal cost (including the tax) of:   what will the firm's new rate of production be after the tax is imposed? How does this new production rate compare with the pre-tax rate? Is it as expected? Explain. Would the effect have been the same if the tax had been imposed on all firms equally? Explain.

Accepted Answer

a.The market equilibrium price and sales

Question 3

If price is between AVC and ATC, the best and most practical thing for a perfectly competitive firm to do is:

Accepted Answer

A)  raise prices. 
B)  lower prices to gain revenue from extra volume. 
C)  shut down immediately, but not liquidate the business. 
D)  shut down immediately and liquidate the business. 
E)  continue operating, but plan to go out of business. 
A)  raise prices. 
B)  lower prices to gain revenue from extra volume. 
C)  shut down immediately, but not liquidate the business. 
D)  shut down immediately and liquidate the business. 
E)  continue operating, but plan to go out of business.

Question 4

In long-run competitive equilibrium, a firm that owns factors of production will have an:

Accepted Answer

A)  economic profit = $0 and accounting profit > $0. 
B)  economic profit > $0 and accounting profit = $0. 
C)  economic and accounting profit = $0. 
D)  economic and accounting profit > $0. 
E)  economic and accounting profit can take any value. 
A)  economic profit = $0 and accounting profit > $0. 
B)  economic profit > $0 and accounting profit = $0. 
C)  economic and accounting profit = $0. 
D)  economic and accounting profit > $0. 
E)  economic and accounting profit can take any value.

Figure 8.5.2 -Refer to Figure 8.5.2 above. The shift in the marginal cost curve implies:

If price is between AVC and ATC, the best and most practical thing for a perfectly competitive firm to do is:

In long-run competitive equilibrium, a firm that owns factors of production will have an:

Preliminaries

The Basics of Supply and Demand

Consumer Behavior

Individual and Market Demand

Uncertainty and Consumer Behavior

Production

The Cost of Production

The Analysis of Competitive Markets

Market Power: Monopoly and Monopsony

Pricing With Market Power

Monopolistic Competition and Oligopoly

Game Theory and Competitive Strategy

Markets for Factor Inputs

Investment, Time, and Capital Markets

General Equilibrium and Economic Efficiency

Markets With Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters

Exam 8: Profit Maximization and Competitive Supply

Figure 8.5.2 -Refer to Figure 8.5.2 above. The shift in the marginal cost curve implies:

If price is between AVC and ATC, the best and most practical thing for a perfectly competitive firm to do is:

In long-run competitive equilibrium, a firm that owns factors of production will have an:

Preliminaries

The Basics of Supply and Demand

Consumer Behavior

Individual and Market Demand

Uncertainty and Consumer Behavior

Production

The Cost of Production

The Analysis of Competitive Markets

Market Power: Monopoly and Monopsony

Pricing With Market Power

Monopolistic Competition and Oligopoly

Game Theory and Competitive Strategy

Markets for Factor Inputs

Investment, Time, and Capital Markets

General Equilibrium and Economic Efficiency

Markets With Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters