Economics Homework 4 Recap

Wendi is a farmer who produces 100 bushels of quinoa in the short run. Her average total cost per bushel is $1.75, her total revenue is $450, and her total fixed cost is $100. In the short run, Wendi's?

• Average fixed cost is $1.50.

• Economic profit per bushel is $2.75.

• Average variable cost is $1.25.

• Economic profit is $250.

The break-even price for a perfectly competitive firm is equal to the?

• Minimum average variable cost.

• Marginal revenue, provided that marginal revenue is equal to marginal cost.

• minimum average fixed cost.

• minimum average total cost.

In the short run, if AVC ≤ P ≤ ATC, a perfectly competitive firm?

• Produces output and earns zero economic profit.

• Produces output and earns an economic profit.

• Produces output and incurs an economic loss.

• Does not produce output and earns economic profit.

In the short run, a perfectly competitive firm produces output and earns an economic profit if?

• P > ATC

• P = ATC.

• P < MC.

• P < ATC.

Elena sells scarves off the Santa Monica Pier in the summer through a kiosk she rents. Because of the location and type of good she sells, she is operating in a perfectly competitive market. If Elena sells 10 scarves at $5 per scarf, her marginal revenue is?

• $5

• More than $5 but less than $50.

• $50

• $250

The marginal revenue received by a firm in a perfectly competitive market?

• Is greater than the market price.

• Is less than the market price.

• Equals the market price.

• Increases inversely with the quantity of output sold.

The assumptions of perfect competition imply that?

• Individuals in the market accept the market price as given.

• Individuals can influence the market price.

• Each firm in the market knows only its own price.

• The price set in the market is collectively determined by the four largest firms.

• Curve N

• Curve M

• Curve O

• None of the Curves

In perfect competition, the assumption of easy entry and exit implies that, in the _____ run, all firms in the industry will earn _____ economic profits?

• Long; Zero

• Short; Positive

• Short; Zero

• Long; Positive

If some firms in a perfectly competitive industry are incurring economic losses, then in the long run, the?

• Number of firms in the industry will increase.

• Industry supply curve will shift to the right.

• Number of firms in the industry will not change.

• Number of firms in the industry will decrease.