ECON 1002 Microeconomics Unit 3 Milestone ECON1002 Microeconomics Unit 3 Milestone

ECON 1002 Microeconomics Unit 3 Milestone Click below link for Answer https://www.sobtell.com/q/tutorial/default/206919-econ-1002-microeconomics-unit-3-milestone https://www.sobtell.com/q/tutorial/default/206919-econ-1002-microeconomics-unit-3-milestone

1 Product Price Cost Per Unit Quantity Sold Quantity Produced Opportunity Cost

$1.25 $0.75 690 750 100

Using the data in this table, calculate the firm’s economic profit.

• $320 • -$300 • $300 • -$200 • -$520 • $200

CONCEPT Economic Profit 2

This firm is currently producing at 25 units; which of the following should it do in order to maximize profit?

• The firm should shut down production entirely.

• The firm should decrease output.

• The firm should increase output to 80 units.

• The firm should do nothing. It is already producing at maximum optimization.

CONCEPT Output Optimization: Marginal Revenue / Marginal Cost 3 Which of the following is a characteristic of monopolistic competition?

• Advertising increases the cost of production.

• Predatory price cutting occurs.

• Firms sell homogenous products.

• Cooperation between firms is sometimes used to maintain prices.

CONCEPT Monopolistic Competition 4

Using the graph above, the firm is best served producing at __________.

• Point A • Point D • Point B • Point C CONCEPT Production Function and Constraints 5

If the market price of apples drops to $9, at which of the following will the firm be?

• Operating at a short term loss • At the shutdown point • Making a profit • Below the shutdown point • Just breaking even CONCEPT Breakeven Point 6 Which of the following is true regarding how a market type interacts with constant, increasing and decreasing cost industries?

•

In a perfectly competitive market, firms will usually experience significant economies of scale until very high levels of output.

• In a natural monopoly, firms will always reach diseconomies of scale at high levels of output.

• In a monopoly, firms are likely to begin experiencing diseconomies of scale at relatively low levels of output.

• In a perfectly competitive market, firms tend to experience diseconomies of scale at relatively low levels of output.

CONCEPT Constant, Increasing and Decreasing Cost Industries 7

Given the graph shown here, the firm should contemplate shutting down production at which of the following points?

• When MC (the purple line) reaches its lowest point • At Q1 • When MC (the purple line) is greater than Q1 • At Q2 CONCEPT Shut-down Point 8 If the variable costs for a firm are $40,000, the fixed costs are $20,000, and the firm sells 100 units, what are the firm's average total costs?

• $400 • $60,000

• $20,000 • $600 CONCEPT Cost: Total, Marginal and Average 9 Which of the following is why the long run average cost curve must lie at the same level or below any short run average cost curve?

• Because of the law of diminishing returns • Because of economies of scale • Because in the long run, a firm will generally operate at higher per-unit cost than in the short run • Because in the long run, all production costs are variable CONCEPT Long-Run Supply Curve 10 Based on the descriptions below of different jobs Nancy has held, which would qualify as an oligopoly?

• Nancy was a telemarketer for a software company with many buyers and sellers. Everyone’s products were fairly unique, but it was very easy to enter the software market. One advantage Nancy’s company had was that it had an informational advantage over many other companies.

• Nancy was a fruit vendor. In her market there were many buyers and sellers. It was easy and cheap to start a vendor stand. Everyone’s fruits were basically identical.

•

Nancy was an administrative assistant for an oil company with very few other sellers. Other companies had trouble getting into the fossil fuel market. All the fossil fuel companies had the same information, but they had an information advantage over the buyers.

• Nancy was a customer service representative for the local water company. The company had exclusive rights to operate as the only company providing water to local residents since the costs to lay competing pipelines were a barrier to entry preventing competition. They were, however, regulated by the government.

CONCEPT Oligopoly 11 Number of Employees Revenue Product 0

0

0

1

9

9

2

24

15

3

36

12

4

43

7

Total Production

Marginal Product of Labor

Marginal

If the price of the item is $15.00 per unit and the employees cost $125 each, how many employees should the firm hire to maximize their profit?

• Three employees • Four employees • Two employees • One employees CONCEPT Output Optimization: Marginal Revenue Product 12 A variable input is one that __________.

• will change as a result of changes in production • will always have increasing costs • will not change over the scope of production • is highly expensive to change in the long run CONCEPT Production Function and Constraints 13 Average total costs are equal to __________.

• total cost minus quantity provided • marginal cost as production increases • fixed costs plus variable costs • average variable plus average fixed costs CONCEPT Cost: Total, Marginal and Average 14 The Prisoner's Dilemma can come into play when firms ___________.

• decide whether to work together on things like price or production levels • are regulated by the government in order to provide fair pricing to consumers • are forced to advertise and market their goods to consumers •

engage in predatory pricing to move each other out of the market CONCEPT Oligopoly 15

Based on this graph, what amount should the company choose to produce to maximize profit?

• 65 • 0 • 49 • 80 • 71 CONCEPT Output Optimization: Total Revenue / Total Cost 16 When a firm sees average costs start to increase as production increases, this is known as __________.

• a firm's shut down point • diseconomies of scale • increasing total costs • scope of production CONCEPT Economies, Constant and Diseconomies of Scale

17 As a part of her research before hiring another employee to help sell cookbooks at her Books for Cooks store, manager Shelly calculated weekly production numbers.

Number of Workers

Total Product Marginal Product

0

0

---

---

1

75

75

75

2

157

82

78.5

3

213

?

?

4

235

22

58.75

5

275

40

55

Average Product

What are the marginal product and average product for three workers?

• Marginal Product = 56; Average Product = 71 • Marginal Product = 7; Average Product = 71 • Marginal Product = 56; Average Product = 18.7 • Marginal Product = 7; Average Product = 18.7 CONCEPT Product: Total, Marginal, Average, and (Marginal) Revenue 18 Which of the following is a trait of a perfectly competitive market?

• Information flows freely •

Firms are not producing at minimum cost • Firms are price makers • Barriers to entry exist CONCEPT Perfect Competition 19 The additional income a company generates from selling one more unit due to this is called which of the following?

• Break even point • Price effect • Diseconomies of scale • Output effect CONCEPT Revenue: Total, Marginal and Average 20 Which of the following market structures has only one seller, who acts as a price maker?

• Monopoly • Monopolistic competition • Perfect competition • Oligopoly CONCEPT

Monopoly 21 Product Price Unit Cost Units Sold Units Produced Opportunity Cost

$40.00 $10.00 200 1100 $850

Given the information in the table shown above, the accounting profit is which of the following?

• -$3,000 • $11,000 • -$2,150 • $8,000 CONCEPT Economic Profit 5 questions were answered incorrectly.

1

Based on this graph, what amount should the company choose to produce to maximize profit?

• 80 • 0 • 65 • 71 • 49 CONCEPT Output Optimization: Total Revenue / Total Cost 2

Using the graph above, the firm is best served producing at __________.

• Point B • Point C • Point D • Point A CONCEPT Production Function and Constraints 3 Product Price Cost Per Unit Quantity Sold Quantity Produced Opportunity Cost

$1.25 $0.75 690 750 100

Using the data in this table, calculate the firm’s economic profit.

• -$300 • $300 • $200 • -$200 • -$520 • $320 CONCEPT Economic Profit 4 If the variable costs for a firm are $40,000, the fixed costs are $20,000, and the firm sells 100 units, what are the firm's average total costs?

• $400 • $600 •

$60,000 • $20,000 CONCEPT Cost: Total, Marginal and Average 5 The prisoner’s dilemma in an economic context can be explained as which of the following?

• A model showing when running at a loss would actually be beneficial in the long run • A model used to illustrate why collusion tends to break down • A model showing the sacrifice made by a firm when choosing one value or opportunity over another • A model showing how a firm should make decisions when variable cost is high and profit is not CONCEPT Oligopoly 6 Product Price Unit Cost

Quantity Sold Quantity Produced

$10.25 500

800

Opportunity Cost

$20.50 $550

Calculate the firm’s accounting profit from the data shown above.

• $1,500 • –$1,500 • $2,050

• –$11,275 CONCEPT Accounting Profit 7 Select the definition that represents an oligopoly.

• A model that explains why price fixing tends to break down • A market structure that consists of a few firms that all sell similar products • When firms work together to determine the price and number of products • A group of firms engaged in price fixing CONCEPT Oligopoly 8 BWCT is a mining company that operates the world's exclusive mining site to harvest a new metal.

Assuming it is a monopoly, which of the following statements is least likely concerning entry and exit in this market currently?

• There are government regulations enabling firms to enter the market easily.

• There is an economy of scale at work making it cheap to produce more products.

• There is predatory price cutting being done by BWCT to keep new companies out of mining.

• There is tight control over a key resource by BWCT.

CONCEPT Monopoly 9 A variable input is one that __________.

• will always have increasing costs • will change as a result of changes in production • is highly expensive to change in the long run • will not change over the scope of production CONCEPT Production Function and Constraints 10 When a firm sees average costs start to increase as production increases, this is known as __________.

• diseconomies of scale • scope of production • increasing total costs • a firm's shut down point CONCEPT Economies, Constant and Diseconomies of Scale 11

If the goal is to maximize profit, at which point on the graph would a firm’s output be optimized?

•

Point 3 • Point 2 • Point 4 • Point 1 CONCEPT Output Optimization: Marginal Revenue / Marginal Cost 12

Given the graph shown here, when is the firm operating at a short run loss?

• At Q1 • At Q2 • Between Q1 and Q2 • When MC (the purple line) is greater than Q1 CONCEPT Shut-down Point 13 Which statement below is NOT true about the long run average supply curve?

• The long run supply curve must be equal to or lie below the short term supply curve.

• The long run supply curve consists of MC from the shutdown point onward.

• The shape of the long run curve is due to economies and diseconomies of scale.

•

The long run supply curve consists of the minimum points of short run supply curves.

CONCEPT Long-Run Supply Curve 14 Marginal cost is equal to the __________.

• change in total cost involved with producing one more unit • total cost minus fixed costs • average fixed cost plus average variable cost • average total cost minus the fixed cost CONCEPT Cost: Total, Marginal and Average 15 Which of the following is true regarding how a market type interacts with constant, increasing and decreasing cost industries?

• In a natural monopoly, firms will always reach diseconomies of scale at high levels of output.

• In a perfectly competitive market, firms tend to experience diseconomies of scale at relatively low levels of output.

• In a monopoly, firms are likely to begin experiencing diseconomies of scale at relatively low levels of output.

• In a perfectly competitive market, firms will usually experience significant economies of scale until very high levels of output.

CONCEPT Constant, Increasing and Decreasing Cost Industries 16

Assuming that Marley, a dairy farmer whose farm produces a number of dairy products, operates in a perfectly competitive market.

Which of the following statements is true?

• The products he produces are similar but are differentiated by advertising.

• The products he produces are identical and thus homogeneous.

• The products he produces are unique and varied.

• No determination about his products can be made.

CONCEPT Perfect Competition 17 Mimi is granted a license to sell her unique Spirit Pins at local high school lacrosse games.

When Mimi prices her pins at $10, she sells 20 pins per game. When she lowers her price to $8, she sells 40 pins.

The additional money she earns from dropping her price is known as the __________.

• Price effect • Marginal revenue • Opportunity cost • Output effect CONCEPT

Revenue: Total, Marginal and Average 18 Which of the following is NOT a trait of monopolistic competition?

• Barriers to entry • Imperfect information • Firms do not produce at minimum cost • Easy entry and exit to and from the market CONCEPT Monopolistic Competition 19

Given the information on this graph, this firm needs to produce which of the following number of units to break even?

• 10 • 11 • 12 • 13 CONCEPT Breakeven Point 20 Number of Employees Revenue Product 0

0

0

Total Production

Marginal Product of Labor

Marginal

1

9

9

2

24

15

3

36

12

4

43

7

If the price of the item is $15.00 per unit and the employees cost $125 each, how many employees should the firm hire to maximize their profit?

• One employees • Three employees • Four employees • Two employees CONCEPT Output Optimization: Marginal Revenue Product 21 When a firm uses five machines, it can produce 600 units daily. A sixth machine allows the firm to product 880 units.

Which of the following is true regarding production?

• The total production for 11 machines would be 1,480 units with an average production of 164 units.

• The marginal production for the sixth machine is 880 units and total production would be 1,480 units.

• The marginal product for the fifth machine is 600 and the average product is 120 units.

• The marginal product for the sixth machine is 280 units and the average product is 147 units.

CONCEPT Product: Total, Marginal, Average, and (Marginal) Revenue 1 As a part of her research before hiring another employee to help sell cookbooks at her Books for Cooks store, manager Shelly calculated weekly production numbers.

Number of Workers

Total Product Marginal Product

0

0

---

---

1

75

75

75

2

157

82

78.5

3

213

?

?

4

235

22

58.75

5

275

40

55

Average Product

What are the marginal product and average product for three workers?

• Marginal Product = 7; Average Product = 18.7 • Marginal Product = 56; Average Product = 71 • Marginal Product = 7; Average Product = 71 • Marginal Product = 56; Average Product = 18.7 CONCEPT Product: Total, Marginal, Average, and (Marginal) Revenue 2 Assuming that Marley, a dairy farmer whose farm produces a number of dairy products, operates in a perfectly competitive market.

Which of the following statements is true?

• The products he produces are similar but are differentiated by advertising.

• The products he produces are identical and thus homogeneous.

• The products he produces are unique and varied.

• No determination about his products can be made.

CONCEPT Perfect Competition 3

Given the graph shown here, when is the firm operating at a short run loss?

• At Q1 • When MC (the purple line) is greater than Q1 • At Q2 • Between Q1 and Q2 CONCEPT Shut-down Point 4 Select the definition that represents an oligopoly.

• A market structure that consists of a few firms that all sell similar products

• A group of firms engaged in price fixing • A model that explains why price fixing tends to break down • When firms work together to determine the price and number of products CONCEPT Oligopoly 5

This firm is currently producing at 25 units; which of the following should it do in order to maximize profit?

• The firm should shut down production entirely.

• The firm should decrease output.

• The firm should increase output to 80 units.

• The firm should do nothing. It is already producing at maximum optimization.

CONCEPT Output Optimization: Marginal Revenue / Marginal Cost 6 Which of the following is NOT a trait of monopolistic competition?

• Imperfect information • Firms do not produce at minimum cost • Barriers to entry •

Easy entry and exit to and from the market CONCEPT Monopolistic Competition 7

Given the following production function for a train engine manufacturing company, at what point (or points) should the firm produce?

• A • E&D • B&E • D CONCEPT Production Function and Constraints 8 If the variable costs for a firm are $40,000, the fixed costs are $20,000, and the firm sells 100 units, what are the firm's average total costs?

• $400 • $20,000 • $60,000 • $600 CONCEPT Cost: Total, Marginal and Average 9

Sergio leaves his job as a hockey coach to open his own skate sharpening shop at a local rink.

Sergio is confident that the skate sharpening business will earn him more than the $500 per week that he earned at his coaching position.

Sergio's business is good; he averages 100 pairs of skates per week, and charges $8 per pair to sharpen skates. He does all of the work himself, but has to pay the rink $150 per week for the lease on the equipment.

Is Sergio better off operating his own business?

• Yes, he is earning an economic profit of $800 each week.

• No, he should have stayed at the coaching position where he earned $500 per week.

• No, he is only earning $150 per week.

• Yes, he is now earning an economic profit of $150 per week.

CONCEPT Economic Profit 10 The Prisoner's Dilemma can come into play when firms ___________.

• decide whether to work together on things like price or production levels • are forced to advertise and market their goods to consumers • engage in predatory pricing to move each other out of the market • are regulated by the government in order to provide fair pricing to consumers CONCEPT Oligopoly 11 Which of the following is true about marginal cost?

•

In the long run, every firm’s marginal cost must equal zero.

• Marginal cost is the change in total cost that results from a single unit increase in the quantity produced.

• Marginal cost can be found at the intersection of a firm's budget constraints and production function.

• The marginal cost will consistently fall with an increase in production.

CONCEPT Cost: Total, Marginal and Average 12 Which of the following describes an industry that experiences economies of scale, even at high levels of output?

• Perfectly competitive industry • Oligopoly • Monopolistic competition • Natural monopoly CONCEPT Constant, Increasing and Decreasing Cost Industries 13 Product Price Unit Cost Units Sold Units Produced Opportunity Cost

$40.00

$10.00 200 1100 $850

Given the information in the table shown above, the accounting profit is which of the following?

• -$2,150 • -$3,000 • $11,000 • $8,000 CONCEPT Economic Profit 14

Given the information on this graph, this firm needs to produce which of the following number of units to break even?

• 10 • 11 • 12 • 13 CONCEPT

Breakeven Point 15 Which scenario corresponds with economies of scale?

• A decrease in production will cause the next unit to cost the same.

• An increase in production will cause the cost of the next unit to decrease.

• A decrease in production will cause the next unit to first increase in cost, then decrease, then increase again.

• An increase in production will cause the cost of the next unit to increase.

CONCEPT Economies, Constant and Diseconomies of Scale 16 Mimi is granted a license to sell her unique Spirit Pins at local high school lacrosse games.

When Mimi prices her pins at $10, she sells 20 pins per game. When she lowers her price to $8, she sells 40 pins.

The additional money she earns from dropping her price is known as the __________.

• Marginal revenue • Opportunity cost • Price effect • Output effect CONCEPT Revenue: Total, Marginal and Average 17

Which of the following is why the long run average cost curve must lie at the same level or below any short run average cost curve?

• Because in the long run, all production costs are variable • Because of economies of scale • Because in the long run, a firm will generally operate at higher per-unit cost than in the short run • Because of the law of diminishing returns CONCEPT Long-Run Supply Curve 18 Which of the following market structures has only one seller, who acts as a price maker?

• Monopolistic competition • Perfect competition • Monopoly • Oligopoly CONCEPT Monopoly 19 A variable input is one that __________.

• will not change over the scope of production • will change as a result of changes in production •

is highly expensive to change in the long run • will always have increasing costs CONCEPT Production Function and Constraints 20 Number of Employees Revenue Product 0

0

0

1

19

19

2

50

31

3

75

25

4

96

21

5

111

15

Total Production

Marginal Product of Labor

Marginal

Based on the data in this table, how many employees should the company hire in order to maximize their profit if the price of product is $5 and cost of each worker is $100?

• Three employees • Five employees • Two employees • Four employees CONCEPT Output Optimization: Marginal Revenue Product 21

Based on the graph above, should the firm increase, decrease or stay at current levels of production to maximize profit?

•

Decrease until total cost is at its lowest point • Increase until the total revenue curve and total cost curve intersect • Increase until the slope of the total revenue curve and total cost curve are equal • Decrease until total revenue is at its highest point CONCEPT Output Optimization: Total Revenue / Total Cost