1. Which of the following is an explicit cost? a) The wages a firm pays to its w
ID: 1173268 • Letter: 1
Question
1. Which of the following is an explicit cost?
a) The wages a firm pays to its workers.
b) The opportunity cost of an owner/entrepreneur's time invested in the firm.
c) The opportunity cost of the money the business owner/entrepreneur has invested in the firm.
d) None of the above.
2. I pay only $5 for a large cheese pizza at Little Caesar
Which of the following is an explicit cost? The wages a firm pays to its workers. The opportunity cost of an owner/entrepreneur's time invested in the firm. The opportunity cost of the money the business owner/entrepreneur has invested in the firm. None of the above. I pay only $5 for a large cheese pizza at Little Caesar's even though I am willing to pay $10. My consumer surplus is $50 $15 $7.50 $5 For a perfectly competitive firm, marginal revenue (MR) is constant, given that the firm is a price taker. is less than price, given that selling additional units pulls down the price of all units. is greater than price since the firms demand is perfectly elastic. is u-shaped due to the law of diminishing marginal returns. Use the table below to answer the following TWO questions. According to the table above, the average product (AP) of 3 units of labor is 7 9 10 27 According to the table above, the marginal product (MP) of 3rd unit of labor is 7 9 10 27 Assume that the total utilities for the 7th and 8th units of a good consumed are 55 and 67, respectively. The marginal utility (MU) for the 8th unit is 122 67 61 12 Suppose the first four units of an output produced have total costs of 50, 150, 300, 500, respectively. The marginal cost (MC) of the SECOND unit of output is 200. 150. 100. 75. In the short run, a perfectly competitive firm will produce even with an economic loss, as long as marginal revenue equals marginal cost. (MR=MC) price is less than average total cost. (P AVC) price is greater than marginal revenue. (P > MR) Which of the following correctly explains why sellers in a perfectly competitive market are price-takers? There are few sellers, and so they have the power to take whatever price they want. ellers in a competitive market have the power to influence price by colluding with one another and using quotas to limit overall market output and thus raise price. Individual buyers in a competitive market have the power to influence price, and thus can impose prices and other conditions on powerless sellers. There are many small sellers, and so the market process generates an equilibrium price that cannot be influenced by any one seller. Thus they have no choice but to take the price generated by the market process. Which of the following represents the key difference between the short run and the long run? In the short run at least one of a firm's resources is fixed, while in the long run all resources under the firm's control are variable. The short run corresponds to the anticipated remaining life span of the owner/entrepreneur. In the long run at least one of a firm's resources is fixed, while in the short run all resources under the firm's control are variable. None of the above. The profit-maximizing rate of output for a firm in a perfectly competitive market is found when which of the following occurs? Total revenue equals total cost. (TR =TC) Price equals average total cost. (P=TC) Marginal revenue equals marginal cost. (MR=MC) Price equals average variable cost. (P=AVC) The firm's demand curve for a product sold in a perfectly competitive market is inelastic, but not perfectly inelas perfectly inelastic. elastic, but not perfectly elastic. perfectly elastic. Consider the graph above. The profit-maximizing price and output for a firm under Monopoly is a price of $2 and a quantity of 30. a price of $1 and a quantity of 20. a price of $3 and a quantity of 30. a price of $3 and a quantity of 20. Assuming Total Cost is $40 at the Profit maximizing output; Profit for the above firm is , 10 20 30 40 When price discrimination occurs the monopolist charges the same profit-maximizing price to all buyers. the firm attempts to convert consumer surplus to economic profit. the buyers with the most inelastic demand will pay the lowest price. both b and c. Consider the graphs of a perfectly competitive market below What is the profit maximizing price and quantity of the FIRM? Is the firm earning an economic profit or loss? How much is it? (show your work) Consider the table below Price of yogurt smoothie = $2.00 Fill in the MP and MRP columns in the table above. How much labor will the firm hire if the wage = $7/hour? if the wage = $12/hour? Consider the graph below: Why does the graph above depict a natural monopoly? what is the profit-maximizing price and quantity for this monopoly?Explanation / Answer
1) Explicit cost : Wages to the worker.
2) Consumer surplus = 10 - 5 = $ 5
3) Marginal revenue is constant since firm is a price taker
4) Average product of labour = 27 / 3 = 9
5)Marginal product of labour = 27 - 20 = 7
6) Marginal utility for 8th unit = 67 -55 = 12
7)Marginal cost of second unit = 150 - 50 = 100
8) In the short run, a perfectly competitive firm will produce even with an economic loss, as long as P < ATC
9) There are many small sellers, and so the market process generates an equilibrium price that cannot be influenced by any one seller. Thus they have no choice but to take the price generated by the market process.
10) In the short run at least one of a firm's resources is fixed, while in the long run all resources under the firm's control are variable.
11) Marginal revenue equals marginal cost. (MR=MC)
12)perfectly elastic.
13) GRAPH NOT SEEN
14) 40
15) Both b and c are true
16) GRAPH NOT VISIBLE
17) The MP columns shall have entries as: 10 , 12 , 20 , 8 , 8, 7 , 4 , 3
MRP = 20 , 24 , 40 , 16 , 16 , 14 , 8 , 6
At 7$ / hour profit is maximum at 7 labours
A 12$/ hour profit is max at 5 labours
18) Image not VISIBLE
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