Download homework problem set #2

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Use the following information to answer the questions #1-6.
1. Figure 6.5 illustrates the market for sugar. With free trade, consumer surplus in the
market would be shown as area:
A) ABC.
B) AEF.
C) GEQ1.
D) ABQ20.
2. Figure 6.5 illustrates the market for sugar. If sugar imports were banned, consumer
surplus in the market would be shown as area:
A) ABC.
B) AEF.
C) GEQ1.
D) ABQ20.
3. Figure 6.5 illustrates the market for sugar. With free trade, producer surplus in the
market would be shown as area:
A) ABC.
B) AEF.
C) GEQ1.
D) FEG.
4. Figure 6.5 illustrates the market for sugar. If sugar imports were banned, producer
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surplus in the market would be shown as area:
A) ABC.
B) AEF.
C) CBD.
D) FEG.
5. Figure 6.5 illustrates the market for sugar. With free trade, total surplus in the market
would be shown as area:
A) ABC.
B) AEF.
C) AEG.
D) FEG.
6. Figure 6.5 illustrates the market for sugar. If sugar imports were banned, total surplus
in the market would be shown as area:
A) ABC.
B) AEF.
C) CBD.
D) ABD.
Use the following information to answer the questions #7 and 8.
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7. Explain your answer. Refer to Figure 7.5. Assume that Julie currently faces budget
line AB. Which of the following events would cause the rotation of her budget line from
AB to AC?
A) a decrease in the price of rental videos
B) a decrease in the price of pizza
C) an increase in Julie's income
D) a decrease in the prices of both pizza and rental videos
8. Explain your answer. Refer to Figure 7.5. Assume that Julie currently faces budget
line AC. If her income remains unchanged, which of the following events could cause the
shift of her budget line from AC to DE?
A) a decrease in the price of pizza and an increase in the price of rental videos
B) an increase in the price of pizza and a decrease in the price of rental videos
C) a decrease in both prices
D) an increase in both prices
Fill in all cells in the table 8.3 below. Use the following information to answer the
questions #9-12.
Number of Cakes
0
1
2
3
4
VC
MC
AVC
FC
50
TC
ATC
30
50
25
155
Table 8.3
9. All the work has to be shown. Table 8.3 presents the cost schedule for Candy's
Cakes. If Candy produces zero cake, Candy's total costs are:
A) $0.
B) $50.
C) $100.
D) $150
10. All the work has to be shown. Table 8.3 presents the cost schedule for Candy's
Cakes. If Candy produces one cake, Candy's total variable costs are:
A) $0.
B) $30.
C) $50.
D) $80.
11. All the work has to be shown. Table 8.3 presents the cost schedule for Candy's
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Cakes. If Candy produces two cakes, Candy's marginal cost is:
A) $0.
B) $20.
C) $25.
D) $50.
12. All the work has to be shown. Table 8.3 presents the cost schedule for Candy's
Cakes. If Candy produces three cakes, Candy's marginal costs are:
A) $0.
B) $25.
C) $75.
D) $41.67.
Use the following information to answer the questions #13-16.
Output
0
1
2
3
4
5
6
Total Cost
15
25
33
40
48
58
70
Table 8.5
13) All the work has to be shown. Refer to Table 8.5. The total fixed cost of producing
two units is:
A) $0.
B) $8.
C) $11.
D) $15.
14) All the work has to be shown. Refer to Table 8.5. The marginal cost of the third unit
of output is:
A) $0.
B) $7.
C) $8.
D) $40.
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15) All the work has to be shown. Refer to Table 8.5. The average variable cost of
producing five units of output is:
A) $0.
B) $8.60.
C) $10.
D) $11.60.
16) All the work has to be shown. Refer to Table 8.5. The total variable cost of
producing five units of output is:
A) $43.
B) $48.
C) $8.60.
D) $58.
Use the following information to answer the questions #17-19.
17) All the work has to be shown. Figure 8.2 presents a firm's marginal, average total,
average fixed, and average variable cost curves. The firm faces fixed costs of:
A) $130.
B) $20.
C) $110.
D) $4000.
18) All the work has to be shown. Figure 8.2 presents a firm's marginal, average total,
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average fixed, and average variable cost curves. The firm minimizes average total costs
by producing ________ units.
A) 50
B) 100
C) 150
D) 200
19) All the work has to be shown. Figure 8.2 presents a firm's marginal, average total,
average fixed, and average variable cost curves. The firm minimizes average variable
costs by producing ________ units.
A) 50
B) 100
C) 150
D) 200
Use the following information to answer the questions #20-21.
20) All the work has to be shown. Figure 9.2 shows the cost structure of a firm in a
perfectly competitive market. If the market price is $10 and the firm chooses the profit
maximizing output level, its profit is:
A) $1,000.
B) $800.
C) $720
D) $200.
21) All the work has to be shown. Figure 9.2 shows the cost structure of a firm in a
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perfectly competitive market. Suppose that market price falls to $6. If the firm produces
at an output level that causes it to suffer an economic loss of $120, its average total cost
(X) is:
A) $8.
B) $7.5.
C) $6.5.
D) $4.
Use the following information to answer the questions #22-25.
22) All the work has to be shown. Suppose that Figure 10.4 shows a monopolist's
demand curve, marginal revenue, and its costs. The monopolist would maximize its profit
by producing a quantity of:
A) 30 units.
B) 50 units.
C) 60 units.
D) There is no sufficient information.
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23) All the work has to be shown. Suppose that Figure 10.4 shows a monopolist's
demand curve, marginal revenue, and its costs. The monopolist would maximize its profit
by charging a price of:
A) $35.
B) $25.
C) $20.
D) $16.
24) All the work has to be shown. Suppose that Figure 10.4 shows a monopolist's
demand curve, marginal revenue, and its costs. At the profit maximizing output level, the
monopolist's profit would be:
A) $730.
B) $570.
C) $320.
D) $150.
25) All the work has to be shown. Suppose that Figure 10.4 shows an industry's market
demand, its marginal revenue, and the production costs of a representative firm. If the
industry was perfectly competitive, a representative firm's profit would be:
A) $1,250.
B) $450.
C) $250.
D) There is not sufficient information.