12. What do we know about the short-run supply curve for a firm in a perfectly competitive market?

Question 12 options:

A.	It is likely to be horizontal.
B.	It is likely to slope downward.
C.	It is determined by forces external to the firm.
D.	It is the same as its marginal-cost curve (above average variable cost).

13. When existing firms in a competitive market are profitable, which of the following has an incentive?

A.	new firms to seek government subsidies that would allow them to enter the market
B.	new firms to enter the market, even without government subsidies
C.	existing firms to raise prices
D.	existing firms to increase production

Question 14

Scenario 13-3 Zach took $500,000 out of the bank and used it to start his new cookie business. The bank account pays 4 percent interest per year. During the first year of his business, Zach sold 15,000 boxes of cookies for $3 per box. Also, during the first year, the cookie business incurred costs that required outlays of money amounting to $14,000.

Refer to Scenario 13-3. What was Zach's economic profit for the year?

A.	-$455,000
B.	-$6000
C.	$11,000
D.	$31,000

Question 15

Table 13-3 Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month.

Output	Fixed	Variable	Total	AFC	AVC	ATC	MC
0	$1080
1	$1080	$400	$1480				$400
2						$965	$450
3		$1350	$2430
4		$1900			$475
5		$2500		$216
6			$4280				$700
7		$4100
8		$5400		$135
9		$7300
10			$10 880		$980

Refer to Table 13-3. One month, Teacher's Helper produced 20 instructional modules. What was the average fixed cost for that month?

A.	54
B.	108
C.	540
D.	1080

16. The Wheeler Wheat Farm sells wheat to a grain broker in Regina, Saskatchewan. Since the market for wheat is generally considered to be competitive, what would the Wheeler Wheat Farm choose to do to maximize its profit?

A.	It would produce the quantity at which average total cost is minimized.
B.	It would produce the quantity at which average fixed cost is minimized.
C.	It would sell its wheat at a price where marginal cost is equal to average total cost.
D.	It would produce the quantity at which market price is equal to the farm's marginal cost of production.

Question 17

Scenario 13-1 Blake decides to spend a spring day in the field planting wheat with some help from some workers he hires. Blake earns total revenue of $870. Blake incurs the following costs: $50 for renting a tractor, $150 for fertilizer, and $100 for wages paid to workers. Blake used $5000 that he could have invested in his savings account at 10 percent interest to organize his spring day planting wheat. In addition, Blake gave up $130 he could have earned at his other job in deciding to plant wheat.

Refer to Scenario 13-1. What is Blake's accounting profit?

A.	-$80
B.	$130
C.	$570
D.	$600