16 If variable cost rises from $60 to $100 as output increases from 15 to 20 units, the marginal cost of the twentieth unit a) is $100 b) is $5 c) is $40 d) is $8 17 Suppose Guild produces 5,000 guitars per year Its average total cost is $90, and its fixed cost is $250,000 What is its variable cost a) $250,000 b) $450,000 c) $25,000 d) $200,000 18 If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then the value of price elasticity of demand is a) 1 3 b) 2 1 3 c) 1 4 d) 3 19 So long as P AVC, the competitive firm's short run supply curve is equal to a) AVC b) MC c) P d) none of these 20 At the profit maximizing level of output for a monopolist a) P AR and AR AC b) P MC and MR MC c) P MC and MR MC d) P MR and AC MC 21 Holding supply conditions constant, the costs of regulation fall wholly on producers when a) E P 1 b) E P 1 c) E P d) E P 0 22 A 100 markup on cost is equivalent to a markup on price of a) 25 b) 33 c) 50 d) 100 23 A 25 markup on price is equivalent to a markup on cost of a) 25 b) 33 c) 50 d) 100 24 When E P 3, the optimal markup on cost is a) 100 b) 67 c) 50 d) 33 25 When E P 2, the optimal markup on price is a) 100 b) 67 c) 50 d) 33 Use the following table to answer the next question Quantity Total of output cost 0 $ 50 10 85 20 150 30 220 40 305 50 455 26 If the market price is $8 50, what are the profit maximizing output and profit a) output 40 profit $35 b) output 40 profit $0 c output 0 profit $50 d) output and profit cannot be determined because marginal revenue cannot be calculated 27 If a firm charges a price of $6 for a product with a cost of $5, the markup on cost equals a) 67 b) 33 c) 20 d) 50 28 If a firm charges a price of $5 for a product with a cost of $3, the markup on price equals a) 60 b) 150 c) 250 d) 40 29 If the optimal markup on price is 50 , the optimal markup on cost is a) 100 b) 75 c 50 d) 25

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16  If variable cost rises from $60 to $100 as output increases from 15 to 20 units, the marginal cost of the twentieth unit a) is $100 b) is $5 c) is $40 d) is $8 17 Suppose Guild produces 5,000 guitars per year  Its average total cost is $90, and its fixed cost is $250,000  What is its variable cost  a) $250,000 b) $450,000 c) $25,000 d) $200,000 18 If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then the value of price elasticity of demand is a)  1 3 b)  2 1 3 c)  1 4 d)  3 19 So long as P   AVC, the competitive firm's short run supply curve is equal to  a) AVC b) MC c) P d) none of these  20 At the profit maximizing level of output for a monopolist  a) P   AR and AR   AC b) P   MC and MR   MC c) P   MC and MR   MC d) P   MR and AC   MC 21 Holding supply conditions constant, the costs of regulation fall wholly on producers when  a) E P   1 b) E P    1 c) E P     d) E P   0 22 A 100  markup on cost is equivalent to a markup on price of  a) 25  b) 33  c) 50  d) 100  23 A 25  markup on price is equivalent to a markup on cost of  a) 25  b) 33  c) 50  d) 100  24 When E P    3, the optimal markup on cost is  a) 100  b) 67  c) 50  d) 33  25 When E P    2, the optimal markup on price is  a) 100  b) 67  c) 50  d) 33  Use the following table to answer the next question Quantity Total of output cost 0 $ 50 10 85 20 150 30 220 40 305 50 455 26  If the market price is $8 50, what are the profit maximizing output and profit  a) output   40  profit   $35 b) output   40  profit   $0 c output   0  profit    $50 d) output and profit cannot be determined because marginal revenue cannot be calculated 27  If a firm charges a price of $6 for a product with a cost of $5, the markup on cost equals  a) 67  b) 33  c) 20  d) 50  28  If a firm charges a price of $5 for a product with a cost of $3, the markup on price equals  a) 60  b) 150  c) 250  d) 40  29  If the optimal markup on price is 50 , the optimal markup on cost is  a) 100  b) 75  c 50  d) 25

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16. If variable cost rises from $60 to $100 as output increases from 15 to 20 units, the marginal cost of the twentieth unit a)

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