1.
value:
5.00 points
Suppose you own a small business. Last month, your total revenue was $6,000. In addition, you paid:
$1,000 in monthly rent for office space.
$200 in monthly rent for equipment.
$3,000 to your workers in wages for the month.
$1,000 for the supplies you used that month.
If you correctly determine that your economic profit last month was $600, then it must be true that:
you do not have any implicit costs.
your implicit costs are $200 per month.
your implicit costs are $1,000 per month.
the rent you pay on your equipment is an implicit cost.
2.
value:
5.00 points
Last year Christine worked as a consultant. She hired an administrative assistant for $15,000 per year and rented office space (utilities included) for $3,000 per month. Her total revenue for the year was $100,000. If Christine hadn’t worked as a consultant, she would have worked at a real estate firm earning $35,000 a year.
Last year, Christine’s accounting profit was ______ and her economic profit was ______.
$100,000; $64,000
$49,000; $14,000
$49,000; $9,000
$9,000; 0
3.
value:
5.00 points
Suppose farmers in a given market can either grow soy beans or corn on their land. In addition, suppose a decrease in the demand for corn causes the price of corn to decrease. In the long run, this increase decrease in the demand for corn is likely to ______ the price of soy beans beans.
lead to an increase in
lead to a decrease in
have no effect on
have an ambiguous effect on
4.
value:
5.00 points
Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive.
If the market supply curve is given by S3, then in the long run firms will:
exit the market, leading the market supply curve to shift back to S2.
exit the market, leading the market supply curve to shift back to S1.
enter the market, leading the market supply curve to shift back to S2.
neither enter nor exit the market, so the market supply curve will remain at S3.
5.
value:
5.00 points
Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive.
If the market supply curve is given by S1, then in the long run firms will:
enter the market, leading the market supply curve to shift out to S3.
enter the market, leading the market supply curve to shift out to S2.
exit the market, leading the market supply curve to shift out to S2.
neither enter nor exit the market, so the market supply curve will remain at S1.
6.
value:
5.00 points
Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive.
In the long run, there will be ______ firms in this market.
10
15
25
50
7.
value:
5.00 points
The figure below depicts the short-run market equilibrium in a perfectly competitive market and the cost curves for a representative firm in that market. Assume that all firms in this market have identical cost curves.
In the long run equilibrium in this market:
price will equal $5, and there will be 20 firms in the industry.
price will equal $5, and there will be 10 firms in the industry.
price will equal $8, and there will be 20 firms in the industry.
price will equal $5 and total output will equal 500 units, but there is not enough information to determine how many firms will be in the industry.
8.
value:
5.00 points
Superstar professional athletes can sustain their economic rents because:
team owners will pay anything to win a championship.
they are represented by highly-skilled agents.
their opportunity costs of playing their sport are high.
they have unique talents that they can sell to the highest bidder.
9.
value:
5.00 points
The figure below shows the supply and demand curves for oranges in Smallville.
What is the marginal cost of producing the twentieth pound of oranges?
$2
$3
$4
$8
10.
value:
5.00 points
The figure below shows the supply and demand curves for oranges in Smallville.
When this market is in equilibrium, total economic surplus is ______ per day.
$0
$80
$160
$320
11.
value:
5.00 points
The figure below shows the supply and demand curves for jeans in Smallville.
Suppose jeans initially sell for $80 per pair. If the price of jeans falls to $40 per pair, then total economic surplus will increase by ______ per day.
$160
$80
$40
$640
12.
value:
5.00 points
Refer to the figure below.
If a price ceiling were imposed at $4, consumer surplus would be:
$36.
$20.
$24.
$28.
13.
value:
5.00 points
Refer to the figure below.
If a price ceiling were imposed at $8, producer surplus would be:
$24.
$16.
$8.
$4.
14.
value:
5.00 points
Suppose a small island nation imports sugar for its population at the world price of $1,500 per ton. The domestic market for sugar is shown below.
If the government provides a subsidy of $500 per ton, then consumer surplus will be ______ per day.
$1,000
$4,000
$8,000
$9,000
15.
value:
5.00 points
Suppose a small island nation imports sugar for its population at the world price of $1,500 per ton. The domestic market for sugar is shown below.
If the government provides a subsidy of $500 per ton, then relative to before the subsidy, consumer surplus will ______ by ______ per day.
decrease; $500
decrease; $1,000
increase; $1,000
increase; $5,000
16.
value:
5.00 points
Suppose a small island nation imports sugar for its population at the world price of $1,500 per ton. The domestic market for sugar is shown below.
If the government provides a subsidy of $500 per ton, then the cost of subsidy, which must be borne by taxpayers, will be ______ per day.
$500
$2,000
$5,000
$6,000
17.
value:
5.00 points
Suppose a small island nation imports sugar for its population at the world price of $1,500 per ton. The domestic market for sugar is shown below.
If the government provides a subsidy of $500 per ton, then relative to before the subsidy, total economic surplus will ______ by ______ per day.
increase; $6,500
decrease; $6,500
increase; $1,000
decrease; $1,000
18.
value:
5.00 points
Which of the following would not be included in the calculation of accounting profit?
The wages paid to the company’s workers.
The salary the owner could have earned working elsewhere.
The rent paid by the owner for the use of a building.
The medical insurance coverage for the company’s workers.
19.
value:
5.00 points
Entry into a perfectly competitive industry occurs whenever:
accounting profit is equal to zero.
accounting profit is greater than zero.
economic profit is greater than zero.
economic profit is equal to zero.
20.
value:
5.00 points
One difference between the long run and the short run in a perfectly competitive industry is that:
economic profits in the long run are always greater than they are in the short run.
economic profits in the short run are always greater than they are in the long run.
whenever there are no barriers to entry of any sort, firms earn zero economic profit in the long run but may earn positive or negative economic profit in the short run.
firms necessarily earn positive economic profit in the long run but may earn positive or negative economic profit in the short run.
