If e P = '3 and MC = $0.44, the prot-maximizing price is: $0.99 $0.66 $1.98 8. When the product demand curve is P = $5 - $0.05Q, and Q = 6|], the point price elasticity of demand is: a. -2f3 b. -3f2 c. -8f3 d. -3f8 Use the following table to answer the next question. The yretown Yokels ice hockey team is the only live sports entertainment in _I_J_re_tow_n. Ticket Price Total Attendance Total Revenue Marginal Revenue 514 100 51400 $12 200 32400 $10 $10 300 $3000 '56 $8 400 $3200 52 $6 500 $3000 4.52 $4 600 $2400 -$6 9. At a price of $8 per ticket, the Yokels attract 4m) spectators. For the Yokels to attract Slit} spectators, they would have to price. Total revenue would a. increase; increase b. increase; decrease c. decrease; increase d. decrease; decrease 10. The production function Q = 0.25M\" Y"-5 exhibits: constant returns to scale. increasing returns to scale. increasing and then diminishing returns to scale. diminishing returns to scale. 9-957!\" 11. When Px = $60, MPx = 2 and MPy = 2, relative employment levels are optimal provided: a. Py = 16.74. b. PY = $24. C. PY = $60. Py = $150. 12. When Px = $100, MPx = 20 and MRo = $5, the marginal revenue product of X equals: a. $100. b. $50. C. $10. $5. 13. If total product for each of five units of labor is 10, 16, 20, 30, and 34, respectively, the marginal product of the third unit is a) 20 b) 10 c) 4 d) 0 14. If P = $8 and MC =$5 + Q, the competitive firm's profit-maximizing level of output is: a) 3 b) 0.2 c) 8 d) 1515. If fixed cost at Q = 100 is $130, then 4 a) fixed cost at Q = 0 is $0 b) fixed cost at Q = 0 is less than $130 c) fixed cost at Q = 200 is $260 d) fixed cost at Q = 200 is $130 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) $200,00018. 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) Ep = 1 b) Ep => 1 C) EP = 00 d) Ep = 022. A 100% markup on cost is equivalent to a markup on price of: 25% 33% 50% 100% 23. 25% 33% 50% 100% 24. 100% 67% 50% 33% 25. 100% 67% 50% 33% A 25% markup on price is equivalent to a markup on cost: of: When Ep = -3, the optimal markup on cost is: When Ep = -2, the optimal markup on price is: Use the following table to answer the next question Quantity Total of output cost 0 $ 5 D 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 prot? a} output = 40; prot = $35 13) output = 40; prot = $0 c) output = O; prot = -$5l} d) output and prot cannot be determined because marginal revenue cannot be calculated 27. If a rm charges a price of $6 for a product with a cost of $5, the markup on cost equals: a} 63% 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: 8 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% 30. If the optimal markup on cost is 25%, the optimal markup on price is: a) 20% b) 25% c) 50% d) 100% 31. The competitive market pricing rule-of-thumb for profit maximization is to set: a) MR > MC b) MR = MC c) P = MC/[1 + (1/EP)] d) MC = MR/[1 + (1/EP)]32. What is the Herfindahl-Hirschman Index (HHI) for an industry in which five firms each control 20% of the market? a. 20; b. 100; C. 2,000; d. 5,000I35. Refer to the gure below. From the structure of cost and revenue of the firm, we would predict that this monopoly will: a. Shut down in the short run, and go out of business in the long run. b. Shut down in the short run, but continue to operate in the long run. 0. Operate in the short run, but go out of business in the long run. (1. Operate ATC MC a AVC DO \\ Dermmn' MR Units of output, Q 5. If the point price elasticity of demand equals -2 and the marginal cost per unit is $10, the optimal price is: a. $5 b. $10 c. $20 (1. impossible to determine without further information. When the cross-price elasticity 8 PX = '3 : demand rises by 3% with a 1% increase in the price of X. the quantity demanded decreases by 3% with a 1% increase in the price of X. the quantity demanded rises by 1% with a 3% increase in the price of X. demand decreases by 3% with a 1% increase in the price of X. P-F'P'P