8.) Accounting profits at a firm's economic profit break-even point are A) Positive B) Negative C) Zero D) Equal to the Firm's Total Revenue 9.) Xiao's garage was using 20 units of labor and 20 units of capital to fix 50 cars per day. After it doubled both inputs, its output rose to 87 fixed cars per day. This firm experienced A) economies of scale. B) diseconomies of scale. C) constant returns to scale. D) the law of diminishing marginal returns. 10.) Currently, a bakery's marginal product (MP) of labor is 12 loaves of bread, and the MP of capital is 10 loaves. An hour of labor costs $20, while an hour of capital costs $10. If the firm wants to maintain its current output level and minimize the cost of producing it, this firm should A) increase both labor and capital. B) decrease both labor and capital. C) decrease labor and increase capital. Jobs yong fledue 901 9204go (C D) increase labor and decrease capital. al willing 2 Tomuertos A (.8 11.) In the short run, how would higher fixed costs affect a firm's output level? A) It would lead to an increase in output. B) It would lead to no change in output. C) It would lead to a decrease in output 327 D) It would lead to a shutdown. 12.) If a firm is producing the output level where MR=MC but is suffering (economic) losses, then price must be A) below average variable cost. B) below average total cost. C) below marginal revenue. D) above total cost. 20.32 0012 (0 13.) Let's say a typical competitive firm has the following data in the short run: Price = $10; ATC = $8; AVC = $7. What is likely to happen? A) The size of the industry will remain the same in the long run. B) In the long run the industry will expand because of economic profits. C) In the long run the industry will contract because firms are suffering losses. D) The typical firm would shut down, and the remaining firms will enjoy a higher price. Isups (0 14.) Jack's Corn Farm faces a price of $7 per bushel of corn. Given the information below, which of these output levels produces the highest profit? (Careful!) Answer Output Average Variable Cost Marginal Cost O -0072 (8 1,000 009 12 13 2,000 3,000 15.) If selling more units raises total revenue, then marginal revenue must be A) increasing 480s lnigism portbe (8 B) positive. C) constant. D) negative. This study source was downloaded by 100000810021609 from CourseHero.com on 05-14-2023 23:13:24 GMT -05:0016.) Assume a monopolist's marginal revenue is MR = 20 - 2Q and its marginal cost is MC = 6. The profit- maximizing quantity of output is A) 2. aloud to Todo B) 6 C) 7. D) 13. 17.) Faced with same cost conditions as a perfectly competitive industry, a monopoly will lead to A) greater output, a higher price, and a gain in economic surplus. B) greater output, a lower price, and a gain in economic surplus. C) lower output, a higher price, and a loss in economic surplus. D) lower output, a lower price, and a loss economic surplus. Part 2: Short Problems (23 points). Please show your work for the following questions. 1.) Canela's Farm grows and sells cinnamon, which is sold in a perfectly competitive market. The table below shows cost figures for several levels of output. Output (pounds) |Marginal Cost Average Variable Cost Average Total Cost 100 $22 $22.50 $42.50 food 001 01 08 200 $17 $20 $30 rigid woll lerqs 300 $14 $18.33 $25 400 $13 $17 $22 500 $15 $16.50 $20.50 600 $17 $16.50 $19.83 700 $19 $16.79 $19.64 800 $21 $17.25 $19.75 900 $23 $17.83 $20.32 1,000 $27 $18.65 $20.65 (a) [1 point] If the price of cinnamon is $21 per pound, what is the profit-maximizing output level? (b) [2 points] If the price of cinnamon is $21 per pound, what is the total profit for this firm? (c) [2 points] What is this firm's total fixed cost