Question

15. Suppose the costs of a sandwich store for one day are detailed below.
In that day they produced 40 sandwiches.

Rent: $120

Casual staff wages: $220

Building Insurance: $30

Ingredients: $160

What is their Average Variable Cost of producing 40 sandwiches?

Group of answer choices

$5.50

$9.50

$13.25

$3.75

16.

The table below shows cost data for a firm in a perfectly competitive market.

It is a constant-cost industry.

The current market price is $8.

What is the best answer for what price will be in the long run?

Quantity	Total Cost ($)	Marginal Cost ($)
0	10.00	--
1	15.00	5.00
2	17.50	2.50
3	22.50	5.00
4	30.00	7.50
5	40.00	10.00
6	52.50	12.50
7	67.50	15.00
8	85.00	17.50
9	105.00	20.00

Group of answer choices

$10.00

$15.00

$12.50

$7.50

17.

Which of the following statements is NOT true about a single-price monopolist, facing a downward sloping demand curve, that maximises economic profits?

Group of answer choices

Price will always be higher than it would be in a competitive market.

Economies of scale must be so large that the firm has a natural monopoly.

The marginal revenue curve must always be below the demand curve.

The profit maximising quantity will always be less than the sociakky efficient quantity.

18.

Suppose that there is a permanent increase in demand for daisies. Which of the following is the most likely response in this market?

Group of answer choices

Profits will initially increase, but entry of other firms will drive profits back down again in the long run.

Profits will initially increase, and then remain at this higher level permanently.

Profits will initially increase, but exit of other firms will drive profits back down again in the long run.

Profits will initially decrease, as firms struggle to meet the demand, but profits will go back up again in the long run.

Answer 1

The answers are given below: