Question
25. Market demand is given as QD = 75 - 2P. Market supply is given as QS = 2P + 15. Each identical firm has
25. Market demand is given as QD = 75 - 2P. Market supply is given as QS = 2P + 15. Each identical firm has MC = 3Q and ATC = 2Q. What is a firm's profit?
| A. | $0.00 |
| B. | $18.75 |
| C. | $25.00 |
| D. | $50.00 |
26. What happens if a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue?
| A. | Average revenue exceeds marginal cost. |
| B. | The firm is earning a positive profit. |
| C. | A one-unit decrease in output would increase the firm's profit. |
| D. | The firm must lower marginal costs. |
27. Market demand is given as QD = 110 - 2P. Market supply is given as QS = 3P + 10. Each identical firm has MC = 10Q and ATC = 5Q. What is a firm's profit?
| A. | $15 |
| B. | $20 |
| C. | $30 |
| D. | $40 |
28. Market demand is given as QD = 120 - 2P. Market supply is given as QS = 2P. Each identical firm has MC = 6Q and ATC = 3Q. What is a firm's average total cost?
| A. | $2 |
| B. | $3 |
| C. | $8 |
| D. | $15 |
29. Market demand is given as QD = 40 - P. Market supply is given as QS = 3P. Each identical firm has MC = 5Q and ATC = 3Q. What quantity of output will a typical firm produce?
| A. | 2 |
| B. | 4 |
| C. | 5 |
| D. | 10 |
30. At Beth's Bakery, Beth pays all her workers the same wage and labour is her only variable cost. Consider the following information about bread production at Beth's Bakery:
| Worker | Marginal Product |
| 1 | 5 |
| 2 | 9 |
| 3 | 12 |
| 4 | 14 |
| 5 | 10 |
| 6 | 8 |
| 7 | 6 |
From the information in the Table, what can we conclude about Beth's marginal cost?
| A. | It increases as output increases from 0 to 14 but declines after that. |
| B. | It declines as output increases from 0 to 14 but increases after that. |
| C. | It declines as output increases from 0 to 40 but increases after that. |
| D. | It continually increases as output rises. |
31. Market demand is given as QD = 220 - 3P. Market supply is given as QS = 3P + 40. Each identical firm has MC = 0.3Q and ATC = 0.2Q. What quantity of output will a typical firm produce?
| A. | 2 |
| B. | 6 |
| C. | 60 |
| D. | 100 |
32. Market demand is given as QD = 140 - 4P. Market supply is given as QS = 3P. Each identical firm has MC = 5Q and ATC = 2Q. What is a firm's profit?
| A. | $4 |
| B. | $32 |
| C. | $48 |
| D. | $80 |
33. Market demand is given as QD = 200 - P. Market supply is given as QS = 4P + 100. Each identical firm has MC = 4Q and ATC = 2Q. What is a firm's average total cost?
| A. | 5 |
| B. | 10 |
| C. | 15 |
| D. | 20 |
34. Market demand is given as QD = 300 - 5P. Market supply is given as QS = 5P. Each identical firm has MC = 6Q and ATC = 4Q. What quantity of output will a typical firm produce?
| A. | 5 |
| B. | 10 |
| C. | 30 |
| D. | 60 |
35. Scenario 14-1
Assume a certain firm is producing 1000 units of output (so Q = 1000). At Q = 1000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit.
Refer to Scenario 14-1. At Q = 999, what is the firm's profit?
| A. | $993 |
| B. | $997 |
| C. | $1003 |
| D. | $1007 |
36. Market demand is given as QD = 60 - P. Market supply is given as QS = 3P. Each identical firm has MC = 3Q and ATC = 1.5Q. What is a firm's average total cost?
| A. | $1.50 |
| B. | $5.00 |
| C. | $7.50 |
| D. | $15.00 |
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
9781285586618
