1a. Your friend owns the only Pokmon card store in hundreds of miles, so she can pick to sell at any point along the market Pokmon demand curve - which is linear and typically shaped.She knows from experience that at her current selling price the own-price elasticity of demand for cards is equal to -1/2.Suppose she slightly increases her price from its current value.Which one of the following statements is TRUE

a.She will sell more cards.

b.Total revenue from selling cards will stay the same.

c.Total expenditures on buying cards will rise.

d.None of the above are true.

e.Total expenditures on buying cards will fall.

1b. _____________ is(are) most likely a variable cost for a firm.

a.The franchiser's fee that a restaurant must pay to the national restaurant chain

b.The payroll taxes that are paid on employee wages

c.The license fee to operate the business in a state

d.The interest payments made on loans

e.The monthly rent on office space that it leased for a year

1c. Suppose a firm is producing q0and at q0its short run average total cost equals its long run average total cost.

The firm must be producing at its minimum efficient scale.

Group of answer choices

True

False

1d. The Pampered Pet Shop operates in a perfectly competitive industry and hires you as an economic consultant. The firm is currently producing at a point where market price equals its short run marginal cost. Its market price is less than its short run average variable cost. You correctly advise the firm to

a. continue producing in the short run to minimize its loss, but consider exiting the industry in the long run.

b. lower its price so that it can sell more units of output.

c. cease current production immediately and consider going out of business in the long run.

d. raise its price until it breaks even.

1.e Jackie runs a hot chocolate drink bar.In August her revenues are projected to be $10,000 at the point where marginal revenue equals marginal cost.Her variable costs at this point, if she opens the bar, are $9,000.Her only fixed costs in August are $40,000 for rent for her store.However, if she shuts down for the month of August she can sublet her store to a tattoo artist for $20,000 for the month.

Which one of the following statements is TRUE?

a.Jackie should keep the hot chocolate bar open in August and her economic profits will be $1,000 for August.

b.Jackie should keep the hot chocolate bar open in August and her economic profits will be $10,000 for August.

c.Jackie should shut down and rent the store to the tattoo artist and her economic profits will be $-39,000.

d.Jackie should shut down and rent the store to the tattoo artist and her economic profits will be $-20,000.

e.Jackie should keep the hot chocolate bar open in August and her economic profits will be $-39,000 for August.

1.f Suppose that the typical firm in the perfectly competitive silk scarf market has a "U" shaped long run average total cost curve that attains its minimum value at q=50 and at an average total cost of $25.

The typical firm's average variable costs are minimized at q=25 and an average variable cost of $15.

The market demand for silk scarves is:QD= 10,000 - 100P.

In a long run market equilibrium, how many firms will there be?