28) Refer to Figure 8.2. The marginal product of the sixth worker is ________. 28) ______

A) 50

B) 0

C) -5

D) 5

 

29) Accounting profit is equal to: 29) ______

A) total revenue plus accounting cost.

B) total revenue minus implicit costs.

C) total revenue minus economic cost..

D) total revenue minus explicit costs.

 

30) Refer to the below diagrams which pertain to a purely competitive firm producing output q and the industry in which it operates. In the long run we should expect: 30)____

        A)firms to enter the industry, market supply to rise, and product price to fall.

        B)firms to leave the industry, market supply to rise, and product price to fall.

        C)firms to leave the industry, market supply to fall, and product price to rise.

        D)no change in the number of firms in this industry.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31) 

 

 

Refer to the above diagram for a monopolistically competitive firm in short-run equilibrium. This firm will realize an economic: 31)____

            A)  loss of $320.   

            B)  profit of $480.   

            C)  loss of $480.   

            D)  profit of $600.    

 

 

 

32) Refer to Figure 9.7. This firm’s short-run supply curve is the firm’s: 32) ______

A) AVC curve to the left of Point B.

B) marginal cost curve above Point D.

C) marginal cost curve above Point A.

D) marginal cost curve above Point B.

 

 

 

 

 

 

33) Refer to Figure 9.2. If Buffy gives 17 perms per day, her daily profit is: 33) ______

A) $51.

B) $45.

C) $3.

D) $10.

 

34) Verde Inc. has a monopoly over the production of emeralds in Ecuador. Verde Inc. will find it profitable to increase

the mining production of emeralds as long as marginal cost: 34) ______

A) is greater than marginal revenue.

B) is positive.

C) equals marginal revenue.

D) is less than marginal revenue.

 

35) The process of using public policy to gain economic profit is: 35) ______

A) rent seeking.

B) deadweight loss.

C) never successful.

D) illegal.

 

36) When a profit-maximizing firm in monopolistic competition is producing its long-run equilibrium quantity:             36)______

A) its marginal revenue will exceed its marginal cost.

B) its price will be equal to its average total cost.

C) its price will equal its marginal cost.

D) it will be earning economic profit.

 

 

 

 

 

 

 

 

37) Refer to Figure 11.2. In the long run the monopolistic competitor would generate total revenue equal to the area:

37) ______

A) 0BGD.

B) AHE0.

C) 0AFD.

D) AFGB.

 

 

38)Fill in the blanks:  Higher wages lead to higher output price, lower quantity demanded, and therefore fewer workers hired.  This effect is particularly strong when the product’s demand is ___________ and labor costs are a ________ fraction of the costs.  38)_____

            A)  inelastic; large.

            B)  elastic; large.

            C)  inelastic; small.

            D) elastic; small.

 

39) In a competitive labor market, 39) ______

A) the market wage rate is the marginal revenue product of labor.

B) the firm can hire all the labor it wants at the going market wage rate.

C) firms will hire as long as the marginal revenue product of labor is less than or equal to the market wage.

D) all of the above

 

 

40)

Table 17.3

 

Refer to Table 17.3. If the market price of the product is $4 and the firm can hire as many workers as it wants at a wage

of $40, the firm should hire ________ workers. 40) ______

A) 3

B) 2

C) 4

D) 5

 

 

 

 

 

II. SHORT ANSWER (5 questions, 4 points each). Write the phrase that best completes each statement or

answers the question.

 

41) What is the opportunity cost of investing $10,000 of your own money in a business you wish to start?

 

 

 

 

 

 

 

 

 

42) Figure 6.9 below shows the market for tobacco. If the government has no restrictions on imported tobacco, what will be the

price of tobacco and the level of tobacco produced? If the government passes a law banning tobacco imports, what

happens to the price of tobacco and the quantity of tobacco sold?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

43) Comment on the following statement: “In the short run, a firm’s total costs will be zero if the firm chooses to produce

nothing.” 43) _____________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

44) Refer to the above diagram.

 

1. If the price in the above market, prior to reaching equilibrium, is initially $20, what will be the Quantity Supply and the Quantity Demanded?

 

1. What is this out-of-equilibrium situation called?

 

 

1. What will be the eventual Equilibrium Price and Quantity in the above market?

 

 

 

 

 

45) Why does Price = MR in perfect competition?