Homework 8 In Tutorial Library

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TITLE: Homework 8

UNIVERSITY / INSTITUTE: Purdue University

CLASS / COURSE: ECON 25100: Microeconomics

QUESTION DESCRIPTION:

Homework 8
 
1. In answering the question, assume a graph in which dollars are measured on the vertical axis and output on the horizontal axis.
Refer to the above information. For a purely competitive firm: 
 
A. marginal revenue will graph as an upsloping line.  
B. the demand curve will lie above the marginal revenue curve.  
C. the marginal revenue curve will lie above the demand curve.  
 D. the demand and marginal revenue curves will coincide.    
 
2. Refer to the above short-run data. Which of the following is correct? 
 
A. This firm will maximize its profit at 440 units of output.  
 B. Any level of output between 100 and 440 units will yield an economic profit.    
C. This firm's marginal revenue rises with output.  
D. Any level of output less than 100 units or greater than 440 units is profitable.  
 
3. Answer the question on the basis of the following data confronting a firm: 
Refer to the above data. This firm is selling its output in a(n): 
 
A. monopolistically competitive market.  
B. monopolistic market.  
 C. purely competitive market.    
D. oligopolistic market.  
 
4. A firm finds that at its MR = MC output, its TC = $1,000, TVC = $800, TFC = $200, and total revenue is $900. This firm should: 
 
A. shut down in the short run.  
 B. produce because the resulting loss is less than its TFC.    
C. produce because it will realize an economic profit.  
D. liquidate its assets and go out of business.  
 
5. The short-run supply curve of a purely competitive producer is based primarily on its: 
 
A. AVC curve.  
B. ATC curve.  
C. AFC curve.  
 D. MC curve.    
 
6. On a per unit basis economic profit can be determined as the difference between: 
 
A. marginal revenue and product price.  
 B. product price and average total cost.    
C. marginal revenue and marginal cost.  
D. average fixed cost and product price.  
 
7. Refer to the above diagram. At the profit-maximizing output, total fixed cost is equal to: 
 
A. 0AHE.  
 B. 0BGE.  
C. 0CFE.  
D. BCFG.    
 
8. Refer to the above diagram. At the profit-maximizing output, the firm will realize: 
 
A. a loss equal to BCFG.  
B. a loss equal to ACFH.  
C. an economic profit of ACFH.  
 D. an economic profit of ABGH.    
 
9. If a purely competitive firm is producing at some level less than the profit-maximizing output, then: 
 
A. price is necessarily greater than average total cost.  
B. fixed costs are large relative to variable costs.  
C. price exceeds marginal revenue.  
 D. marginal revenue exceeds marginal cost.    
 
10. Answer the question on the basis of the following cost data for a firm that is selling in a purely competitive market:
Refer to the above data. If the market price for the firm's product is $32, the competitive firm will produce: 
 
 A. 8 units at an economic profit of $16.    
B. 6 units at an economic profit of $7.98.  
C. 10 units at an economic profit of $4.  
D. 7 units at an economic profit of $41.50.  
 
11. Answer the question on the basis of the following cost data for a firm that is selling in a purely competitive market:
    
Refer to the above data. If the market price for the firm's product is $28, the competitive firm will: 
 
A. produce 4 units at a loss of $17.40.  
 B. produce 7 units at a loss of $14.00.    
C. shut down in the short run.  
D. produce 6 units at a loss of $23.80.  
 
12. If a purely competitive firm is producing at the P = MC output and realizing an economic profit, at that output: 
 
A. marginal revenue is less than price.  
 B. marginal revenue exceeds ATC.    
C. ATC is being minimized.  
D. total revenue equals total cost.  
 
13. Refer to the above diagram. At P1, this firm will produce: 
 
A. 47 units and break even.  
 B. 47 units and realize an economic profit.    
C. 66 units and earn only a normal profit.  
D. 24 units and earn only a normal profit.  
 
14. Answer the question on the basis of the following cost data for a purely competitive seller:
 
Refer to the above data. If product price is $60, the firm will: 
 
A. shut down.  
B. produce 4 units and realize a $120 economic profit.  
 C. produce 6 units and realize a $100 economic profit.    
D. produce 3 units and incur a $40 loss.  
 
15. Answer the question on the basis of the following cost data for a firm that is selling in a purely competitive market. 
Refer to the above data. We can infer that, at zero output, this firm's total fixed, total variable, and total costs are: 
 
A. zero, zero, and zero, respectively.  
B. zero, $25, and $175, respectively.  
C. $150, $25, and $175, respectively.  
 D. $150, zero, and $150, respectively.    
 
16. Answer the question on the basis of the following cost data for a purely competitive seller:
The above data are for: 
 
A. the long run.  
 B. the short run.    
C. both the short run and the long run.  
D. the intermediate market period only.  
 
17. The following table applies to a purely competitive industry composed of 100 identical firms.
Refer to the above table. The equilibrium price in this purely competitive market is: 
 
A. $5.  
B. $4.  
 C. $3.    
D. $2.  
 
18. The following table applies to a purely competitive industry composed of 100 identical firms.
Refer to the above table. For each of the 100 firms in this industry, marginal revenue and total revenue will be: 
 
A. $4 and $400, respectively.  
B. $3 and $30,000, respectively.  
C. $4 and $20,000, respectively.  
 D. $3 and $18,000, respectively.    
 
19. The demand curve in a purely competitive industry is _____, while the demand curve to a single firm in that industry is _____. 
 
A. perfectly inelastic, perfectly elastic  
 B. downsloping, perfectly elastic    
C. downsloping, perfectly inelastic  
D. perfectly elastic, downsloping  
 
20. For a purely competitive firm total revenue: 
 
A. is price times quantity sold.  
B. increases by a constant absolute amount as output expands.  
C. graphs as a straight upsloping line from the origin.  
 D. has all of these characteristics.    
 
  

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SUBJECTS / CATEGORIES:
1. Business Economics
2. Economics
3. Microeconomics

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