Posted by Anonymous on Monday, December 8, 2008 at 2:15pm.
I have an exam tomorrow and I really need to know how you get the following answers. Please show me! I know it's a lot of questions, but I don't understand how you get the answer...
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40. At Nick's Bakery, the cost to make his homemade chocolate cake is $3 per cake. He sells three and receives a total of $21 worth of producer surplus. Nick must be selling his cakes for
a. $2 each.
b. $7 each.
c. $8 each.
d. $10 each.
Answer: d
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47. Market demand and supply are given as Qd = 1000 - 5P and Qs = 4P - 80 respectively. If P = 100, consumer surplus is
a. $21,760
c. $20,000
b. $16,000
d. $36,000
Answer: a
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7. Assume that the demand and supply curves for cars are elastic. If the government imposed a $500 tax on the buyer of each car, we can assume that the
a. equilibrium price of a car would decrease by less than $500.
b. price of a car would decrease by exactly $500.
c. price of a car would decrease by more than $500.
d. price of a car would not change if both curves were elastic.
Answer: a
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30. Consider the following information about bread production at Beth's Bakery:
Worker Marginal Product
1 5
2 7
3 10
4 11
5 8
6 6
7 4
Beth pays all her workers the same wage and labour is her only variable cost. From this information we can conclude that Beth's marginal cost
a. declines as output increases from 0 to 33, but increases after that.
b. declines as output increases from 0 to 11, but increases after that.
c. increases as output increases from 0 to 11, but declines after that.
d. continually increases as output rises.
Answer: a
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45. In a perfectly competitive market, market demand is given by Qd = 50 - .5P and market supply is given by Qs = P - 10. Each identical firm has a MC = 4Q. The individual firmâ€™s supply curve (above minimum AVC) is given by the equation
a. Q = .25P
c. Q = 5
b. Q = .P - 10
d. none of the above.
Answer: a
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46. In a perfectly competitive market, market demand is given by Qd = 50 - .5P and market supply is given by Qs = P - 10. Each identical firm has a MC = 4Q. In the long run, if minimum LRAC = 40,
a. firms will enter the market.
c. firms will earn zero economic profit.
b. firms will exit the market.
d. firms will incur economic losses.
Answer: c
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48. Suppose the market described in Question #46 above is served by a monopolist with MR = 100 - 4Q. The monopolistâ€™s marginal cost curve would be
a. the market supply curve
b. MC = 10 + Q
c. MC = 4Q
d. both A and B
e. both A and C.
Answer: d
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49. Suppose the market described in Question #46 above is served by a monopolist with MR = 100 - 4Q. The deadweight loss due to monopoly is
a. $432
c. $324
b. $648
d. $216
Answer: d
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