Question :
11) All of the following can be used to compute : 1245262
11) All of the following can be used to compute average profit except
A) marginal profit minus marginal cost.
B) total profit divided by quantity.
C) average revenue minus average total cost
D) price minus average total cost.
Article Summary
According to the Department of Agriculture, net farm income will grow to a record high of $120.6 billion in 2013, up from the previous high mark in 2011 and after adjusting for inflation, its second highest level since 1973. Net cash income, however, is expected to fall by 10 percent due to unsold inventories. Exports of chickens and milk are expected to rise by 3 percent and 17 percent, respectively.
Source: Ros Krasny, “Farm income poised for record 2013: USDA,” Reuters, August 27, 2013.
12) Refer to the Article Summary. All else equal, the increase in demand for chicken and milk exports will ________ the market prices for these exports and ________ economic profit in these markets.
A) increase; decrease
B) decrease; increase
C) increase; increase
D) decrease; decrease
13) Refer to the Article Summary. Assume that after the record year for U.S. farm income in 2013, farmers are expected to break even in 2014. This means that at the quantity being produced in 2014,
A) MC =AVC.
B) MR =MC.
C) MR =ATC.
D) AVC =ATC.
Figure 9-5
Figure 9-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry.
14) Refer to Figure 9-5. If the market price is $20, what is the firm’s profit-maximizing output?
A) 750 units
B) 1,100 units
C) 1,350 units
D) 1,800 units
15) Refer to Figure 9-5. If the market price is $20, what is the amount of the firm’s profit?
A) $5,400
B) $6,750
C) $8,100
D) $16,200
16) Refer to Figure 9-5. If the market price is $20, what is the average profit at the profit-maximizing quantity?
A) $5
B) $6
C) $9
D) $20
17) Refer to Figure 9-5. The firm’s manager suggests that the firm’s goal should be to maximize average profit. In that case, what is the output level and what is the average profit that will achieve the manager’s goal?
A) Q = 1,350 units, average profit =$5
B) Q = 1,100 units, average profit =$6
C) Q = 1,350 units, average profit =$9
D) Q = 1,800 units, average profit =$20
18) Refer to Figure 9-5. The firm’s manager suggests that the firm’s goal should be to maximize average profit. If the firm does this, what is the amount of profit that it will earn?
A) $6,600
B) $6,750
C) $12,150
D) $36,000
19) Refer to Figure 9-5. What is the amount of the firm’s fixed cost of production?
A) $5,400
B) $6,750
C) $8,100
D) It cannot be determined.
20) Refer to Figure 9-5. If the firm’s fixed cost increases by $1,000 due to a new environmental regulation, what happens in the diagram above?
A) All the cost curves shift upward.
B) Only the average variable cost and average total cost curves shift upward; marginal cost is not affected.
C) Only the average total cost curve shifts upward; the marginal cost and average variable cost curves are not affected.
D) None of the curves shifts; only the fixed cost curve, which is not shown here, is affected.
