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In: Economics

1.Marginal profit is equal to marginal revenue plus marginal cost. True or false Spacely Sprockets' short-run...

1.Marginal profit is equal to marginal revenue plus marginal cost.

True or false

Spacely Sprockets' short-run cost curve is C(q,K)=25q2K+15KC(q,K)=25q2K+15K, where q is the number of Sprockets produced and K is the number of robot hours Spacely hires. Currently, Spacely 2.hires 10 robot hours per period. The short-run marginal cost curve is MC(q,K)=50qKMC(q,K)=50qK. If Spacely receives $250 for every sprocket he produces, his profit maximizing output level is 50.

True or False

3.Consider a competitive market in which the market demand for the product is expressed as P = 75 - 1.5Q, and the supply of the product is expressed as P = 25 + 0.5Q. Price, P, is in dollars per unit sold, and Q represents the rate of production and sales in hundreds of units per day. The typical firm in this market has a marginal cost of MC=2.5+10qMC=2.5+10q.

In this case, the typical firm will maximize its profit at the point where MC = P =

True or False

4. Revenue is equal to price times quantity.

True or false

5. The table below lists the short-run costs for One Guy's Pizza. If One Guy's can sell all the output it produces for $12 per unit, One Guy's should produce 58 pizzas to maximize profits.

Q

TFC

TVC

58

100

336.4

59

100

348.1

60

100

360.0

61

100

372.1

True or false

6. Producer surplus in a perfectly competitive industry is the difference between revenue and variable cost. True or false

7. he following table contains information for a price-taking competitive firm. The maximum profit is $13.

Output

Total Cost

Total Revenue

0

5

0

1

7

10

2

11

20

3

17

30

4

27

40

5

41

50

6

61

60

True or false

8. Average total cost for the firm in the following table is U-shaped.

Q

P

TR

MR

TC

MC

0

$30

$0

---

$15

---

1

$30

$30

$30

$25

$10

2

$30

$60

$30

$40

$15

3

$30

$90

$30

$60

$20

4

$30

$120

$30

$85

$25

5

$30

$150

$30

$115

$30

6

$30

$180

$30

$150

$35

True or false

9. Consider the following diagram, where a perfectly competitive firm faces a price of $40. At the profit-maximizing level of output, total revenue is $2,400.

True or false

Solutions

Expert Solution

Rahul Sunny answered 3 years ago
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