Question 6 average total cost of If the average total cost of producing 2 pounds

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Question 6 average total cost of If the average total cost of producing 2 pounds of cheese is S4 and th producing 3 pounds of cheese is S4.2, then the marginal cost of producing equal to: third pound of cheese is Show all calculations below A. $4.2 B. S4.6 C. $8.2 D. $4.5 Answer: Question 7 Nancy owns and operates a drug store that generates total revenues worth $30 million in a particular year. Her accounting costs for the year are S25 million. She could have earned $3 million in this year if she had worked as a consultant for a pharmaceutical firm. Further, she could have earned 5 pereent interest on $40 million of her own money that she invests in the business this year. Nancy's accounting profit in this year isand her economic profit is Show all calculations below A. $5 million; $3 million B. $5 million; $8 million C. $5 million, zero D. Zero; S3 million E. S3 million; $43 million Answer: Question 8 The ordering of market structures from least market power to most market power (where market power is the ability to set its own price) is: A. Monopoly, monopolistic competition, oligopoly, perfect competition. B. Perfect competition, monopolistic competition, oligopoly, monopoly C. Perfect competition, Oligopoly, monopoly, monopolistic competition D. Monopoly, oligopoly, monopolistic competition, perfect competition. E. Monopoly, perfect competition, monopolistic competition, oligopoly Answer

Explanation / Answer

1. a =42.5 , as it's the value of Price for Minimum value of ATC

b 4

c -10

2.

Profit = P*Q - AC*Q

$20,000 = 12*Q - 10*Q

Q = 20,000/2 = 10,000

3. C 14 as here MR =MC

4. Average fixed cost = average total cost - Average variable cost

AFC = 11 - 8 = 3

Total fixed cost = AFC*Q = 3*14 = 42

So its D 42

5. B BDEG

6. AC 0f 2 = 4 , So, TC2 = 2*4 = 8

AC 0f 3 = 4.2 , So , TC3 = 3*4.2 = 12.6

MC = TC3 -TC2 = 12.6 -8 = 4.6

7 C , 5 and 0

Accounting profit = Total Revenue - Accounting Cost = 30 - 25 = 5

Economic profit = Total TEvenue - Economic costs = 30 - 25 - 2 - 0.05*40 = 0

8. B

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