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ECON 101 Final: ECON101 Final Exam Practice 1 with Solutions

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turquoisegnu128
24 Oct 2018
School
UBC
Department
Economics
Course
ECON 101
Professor
All

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Analyse the two following scenarios for firms in perfectly competitive markets: suppose that tc = 100 + 15q, where tc is total cost and q is the quantity produced. The following equations describe the demand for soccer balls, the firm"s total cost and marginal cost: demand: p = 10 q, tota l cost: tc = 3 + q + 0. 5q2. Mc = 1 + q: margina l cost: where q is quantity and p is the price measured in wiknamian dollars. Question 1: this question asks you to find the shut-down price, which is the minimum point of the avc curve. q and the corresponding variable cost function is. Hence, the average variable cost is constant and is equal to 15. When q = 10, the marginal cost is equal to: profits by producing 10 units, the current market must be equal to 40. Mc =4q d = mr q slope =4 qmax = 10 q.

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Related Questions

6. Power Printers Total Costs (per hour)

q TC

0 65

1 80

2 95

3 120

4 150

5 200

If the price of a printer is $50 in this perfectly competitive industry, what is the profit-maximizing rate of output?

7. Which of the following is NOT true in a perfectly competitive market?

a. There is free entry and exit into the industry.

b. Each firm produces a differentiated product.

c. Each firm faces a perfectly elastic demand curve.

d. Price is equal to marginal revenue at every output level for the firm.

8. A perfectly competitive firm should always continue to operate in the short run as long as:

a. P < ATC at the rate of output where MR = MC.

b. P < AVC at the rate of output where MR = MC.

c. MR > AVC at the rate of output where MR = MC.

d. MR > AFC at the rate of output where MR = MC.

9. A firm that makes zero economic profits:

a. Must eventually go bankrupt.

b. Should shut down.

c. Incurs a loss, but should not shut down.

d. Covers all its costs, including a provision for normal profit.

10. A monopoly firm is different from a competitive firm in that:

A. There are many substitutes for the monopolist’s product whereas the competitive firm’s demand curve is perfectly elastic.

B. The monopolist’s demand curve is perfectly inelastic, whereas the competitive firm’s demand curve is perfectly elastic.

C. The monopolist can influence the price in the market, whereas the competitive firm is a price taker.

D. All of the above

Suppose a monopolist faces a demand curve given by P=200-4Q. Additionally, she has marginal costs given by MC=100 and total costs given by TC=25+100Q.

a) calculate the formulas for the monopolists' FC, VC, ATC, AVC, and AFC.

b) calculate the profit - maximizing choice of output, price, and profits.


Also, how come, in a perfectly competitive market, the burden of a tax is shared in the short run? Also, why do consumers bear all of the burden of a tax in the long run?


thank you!

Suppose you are given the following information about a particular PERFECTLY COMPETITIVE INDUSTRY:

The market demand curve is Q = 6500 - 100P

The market supply curve is Q = 1200P

You are also given the following information about a single PERFECTLY COMPETITIVE FIRM that operates in this industry:

The total cost function for the firm is TC = 722 + (Q^2 /200)

The marginal cost for the firm is MC = (2Q/200)

a. Calculate the profit-maximizing level of output for the individual firm and the price they charge.

b. Would you expect to see entry into or exit from this industry in the long-run? EXPLAIN YOUR REASONING. In addition, CALCULATE the price at which entry into or exit from the industry will stop.

c. Clearly explain why firms will continue to remain in the industry even when economic profits are driven to zero in the long run.