PLEASE ANSWER ALL THE QUESTIONS I ASK PLEASE Part 12 1) Which of the following s
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Question
PLEASE ANSWER ALL THE QUESTIONS I ASK PLEASE
Part 12
1) Which of the following statements concerning the above diagram is TRUE?
The average total costs curve is falling at output levels below 400 because marginal costs are below average total costs.
The average total costs curve is falling at output levels below 400 because fixed costs are falling.
The average total costs curve is falling at output levels below 400 because the marginal productivity of labor is falling.
The average total costs curve is falling at output levels below 400 because fixed costs are rising.
The average total costs curve is rising at output levels above 400 because the marginal productivity of labor is rising.
2) Email is free because:
There are no fixed costs needed to produce email.
The average total costs of producing email is zero.
The production of email does not require input..
The additional cost of adding an email user is zero.
Email is subsidized by the government.
3) Which of the following statements concerning the above diagram is TRUE?
The marginal cost curve is falling below output levels of 300 because the law of diminishing returns has set in.
The marginal cost curve is falling below output levels of 300 because average fixed cost is decreasing.
The marginal cost curve is falling below output levels of 300 because the marginal productivity of labor is decreasing and the marginal cost curve is rising above output levels above 300 because marginal productivity of labor is increasing.
The marginal cost curve is rising above output levels of 300 because average fixed cost is decreasing.
The marginal cost curve is falling below output levels of 300 because the marginal productivity of labor is increasing and the marginal cost curve is rising above output levels above 300 because marginal productivity of labor is decreasing.
Part 14
4) Which of the following statements regarding the above diagram is TRUE?
A) If the price is $8 per bushel of wheat, then the typical wheat farmer will earn zero economic profits.
B) If the price is $10 per bushel of wheat, then firms will exit the wheat industry causing the price of wheat to fall in the long run.
C) If the price is $12 per bushel of wheat, then the typical wheat farmer will produce 100,000 bushels of wheatof wheat to increase.
D) If the price of wheat falls from $8 to $6 per bushel of wheat, then the profit maximizing output for the typical wheat farmer will fall from 110,000 bushels to 100,000 bushels of wheat. E) If the price is $6 per bushel of wheat, then the typical wheat farmer will exit the industry causing the supply.
5) If there is constant returns to scale in a competitive industry, then:
A) The long-run supply curve will be horizontal.
B) An increase in demand will raise the average total cost of producing the good.
C) The long-run supply curve will be downward sloping.
D) Then an increase in demand will lower the price in the short run but raise it in the long run. E) Then an increase in demand will raise the price in the short run as well as raise the price in the long run.
6) If price is equal to minimum average total costs, then:
A) Firms will begin to shut down immediately.
B) Firms will earn excess profits in the short run and in the long run there will be entry into the industry.
C) Economic profits will be less than zero but firms will not exit because they earn normal profits.
D) Economic profits will be zero but firms will remain in the industry because they earn normal profits.
E) Economic profits are less than zero but firms are paying some of their fixed costs so they will continue to produce in the short term and exit in the long term when their fixed obligations have expired.
7) Assume that the market for CDs is competitive and the typical CD producer breaks even when the price of CD is $10. Which of the following statements concerning the CD market depicted in the diagram above is TRUE?
A) The increase in demand for CDs will raise the price of CDs in the short run, but the higher price will reduce demand in the long run and cause the price of CDs to fall.
B) If the CD industry is a decreasing cost industry, then the increase in demand shown above will lower the price of CDS below $10 per CD in the long run.
C) If the CD industry is an increasing cost industry, then the increase in demand shown above will raise the price of CDs in the short run but lower the price in the long run.
D) The increase in demand for CDs will raise the profits of CD producers in the short run, but reduce economic profits below zero in the long run.
E) If the CD industry has increasing returns to scale, then the increase in demand shown above will raise the price of CDs in the short run but return the price to $10 in the long run.
8) The shut down point is when:
A) A firm can no longer pay its debts.
B) A firm can only earn normal profits.
C) Price is below minimum average total costs.
D) Price is equal to minimum average variable costs.
E) Output falls below minimum marginal costs.
9) A monopolist never drops their price to the point where:
A) They can only earn normal profits.
B) It is below minimum average total costs.
C) They earn almost no excess profits.
D) Demand is elastic and marginal revenue is above zero.
E) Demand is inelastic and marginal revenue becomes negative.
The average total costs curve is falling at output levels below 400 because marginal costs are below average total costs.
The average total costs curve is falling at output levels below 400 because fixed costs are falling.
The average total costs curve is falling at output levels below 400 because the marginal productivity of labor is falling.
The average total costs curve is falling at output levels below 400 because fixed costs are rising.
The average total costs curve is rising at output levels above 400 because the marginal productivity of labor is rising.
Dollar Cost Average Total Costs 100 200 300 400 500 600 700 OutputExplanation / Answer
(1) The average total costs curve is falling at output levels below 400 because marginal costs are below average total costs.
(2) The additional cost of adding an email user is zero.
(3) The marginal cost curve is falling below output levels of 300 because the marginal productivity of labor is increasing and the marginal cost curve is rising above output levels above 300 because marginal productivity of labor is decreasing.
(4) (A)
If price = ATC, economic profit = 0
(5) (A)
(6) (D)
When price = minimum ATC, firms are in long-run equilibrium earning zero economic profits.
(7) Diagram is missing
(8) (D)
At shutdown point, Price = Minimum AVC, or Revenue = Total variable cost
(9) (B)
If price is below minimum average total cost, there is an economic loss.
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