Part 1: Multiple Choice Questions (20 Points) Question 1 (1 point) Calculate the economic profit assuming that: price = $15 average total cost = $9 number of units = 10 () $45 .;::. $6 per unit () %6 () $60 Question 2 (1 point) Choose the correct answer the demand curve for a perfectly competitive firm is perfectly elastic while the demand curve for a monopolistically competitive firm is unit inelastic the demand curve for a perfectly competitive firm is perfectly elastic while the demand curve for a monopolistically competitive firm is negatively sloped the demand curve for a perfectly competitive firm is perfectly elastic while the demand curve for a monopolistically competitive firm is perfectly inelastic the demand curve for a perfectly competitive firm is unit elastic while the demand curve for a monopolistically competitive firm is perfectly inelastic Question 3 (1 point) The shut down price is where O price equals average fixed cost O price equals marginal cost O price equals minimum average variable cost O price equals average total cost Question 4 (1 point) In the product market, O households buy goods and services and firms sell good and services O households sell labor and firms purchase capital O households sell goods and services and firms buy good and services O households sell labor and firms purchase labor Question 5 (1 point) All of the following statements are correct except O imperfectly competitive firms are price setters and products are differentiated O imperfectly competitive firms are price takers and products are homogeneous O perfectly competitive firms are price takers and products are homogeneous perfectly competitive firms are price takers and it is very easy to enter and exit the market Question 6 (1 point) Surplus occurs when O guantity supplied exceeds quantity demanded O demand exceeds supply O supply exceeds demand O guantity demanded exceeds quantity supplied Question 7 (1 point) The slope of the following demand function: P = -0.6Q4 + 20 is: ()20 (O -1.67 () -06 ()06 Question 8 (1 point) When the demand is inelastic O the percentage change in quantity demanded is greater than percentage change in price Q the percentage change in quantity demanded is zero O the percentage change in guantity demanded is equal to percentage change in price O the percentage change in quantity demanded is less than percentage change in price Question 9 (1 point) Opportunity cost is O average total cost - average variable cost O the same as marginal cost O total revenue - total cost O any benefits forgone whether monetary or non monetary Question 10 (1 point) Equilibrium price is the price where O guantity demanded eguals quantity supplied O price that consumers are willing to pay O quantity demanded exceeds quantity supplied O quantity supplied exceeds quantity demanded Question 11 (1 point) Points inside the production possibilities frontier (PPF) are O inefficient O efficient O none of the above O impossible to attain Question 12 (1 point) For a non regulated normal monopoly O there is government intervention and the average total cost curve has a flat shape O there is government intervention and the average total cost curve has a U shape there is no government intervention and the average total cost curve has a flat shape there is no government intervention and the average total cost curve does not hawve a U shape Question 13 (1 point) The law of demand describes O a positive relationship between price and quantity demanded ceteris paribus O no relationship between price and quantity demanded O a negative relationship between price and quantity demanded ceteris paribus O a negative relationship between price and demand ceteris paribus Question 14 (1 point) In perfect competition O it is easy for firms to both enter the market and exit the market O it is easy for firms to exit the market but it is difficult for firm to enter the market O it is fairly easy for firms to enter and exit the market O it is easy for firms to enter the market but it is difficult for firm to exit the market Question 15 (1 point) Calculate the price elasticity of supply using the following information: Py =$3 P, =55 Q.1= 20 units Q.2= 60 units O 1/3 O 3 O 0.333 O -3 Question 16 (1 point) Factors of production include: O intangible goods O land, labor, and capital O capital and services only O labor only Question 17 (1 point) A profit maximizing company will increase its production as long as: O average revenue is greater than average cost O marginal revenue equals marginal cost O marginal cost is greater than marginal revenue O marginal revenue is greater than marginal cost Question 18 (1 point) The profit maximizing level of output is where O total revenue equals to total cost O marginal revenue is higher than marginal cost O marginal revenue equals to marginal cost O marginal revenue is equal to total cost Question 19 (1 point) Choose the correct answer: O an increase in the number of buyers shifts the entire demand curve to the left ceteris paribus O when prices increase, quantity demanded increases an increase in the number of buyers shifts the entire demand curve to the right ceteris paribus normal goods are goods for which the entire demand curve shift left at any given price level when there is an increase in income level ceteris paribus Question 20 (1 point) Assume that: Qq = 90 - 3P and Q, = 60 + 6P. the equilibrium price is 2.5 and equilibrium quantity is 70 the equilibrium price is 3.33 and equilibrium quantity is 80 O the equilibrium price is 80 and equilibrium quantity is 3.33 the equilibrium price is 3.8 and equilibrium quantity is 85Question 21 (2 points) Explain in your own words the concept of opportunity cost. Provide some examples to support your answer. Paragraph Lato (Recom... Question 22 (2 points) Explain the difference between economic profit and accounting profit. Paragraph =+ Lato (Recom... Question 23 (2 points) What is the difference between total fixed cost and total variable cost? Provide some examples to support your answer. Paragraph + Lato {Recom... Question 24 (2 points) Discuss the behaviour of the factors of production (labor, capital, and technology) in the short run, long run, and very long run. Paragraph + Lato {Recom... Question 25 (2 points) In brief, discuss the characteristics of perfect competition, monopolistic competition, monopoly, and oligopoly. Paragraph + Lato {Recom... Question 26 (1 point) Assume the following demand and supply equations: Qd = 70 - 5P, and Q, = 24 + 4P. Write the demand equation in the form y = mx+b Paragraph IUV A/ + ... Lato (Recom. 19px ... EQ C Question 27 (1 point) Assume the following demand and supply equations: Qd = 70 - 5P, and Q, = 24 + 4P. Write the supply equation in the form y = mx+b Paragraph BIUVA Ev + Lato (Recom.. 19px ... Fa (/>Question 28 (1 point) Assume the following demand and supply equations: Q4 =70 - 5P, and Q. = 24 + 4P Derive the following: Slope of the demand curve Paragraph + Lato (Recorm... Question 29 (1 point) Assume the following demand and supply equations: Q4 =70 - 5P, and Q. = 24 + 4P Derive the following: Y intercept of the demand curve Paragraph Lato {Recom... Question 30 (1 point) Assume the following demand and supply equations: Q4 = 70 - 5P,and Q. = 24 + 4pP. Derive the following: X intercept of the demand curve Paragraph w Lato (Recomi.. Question 31 (1 point) Assume the following demand and supply equations: Q4 = 70 - 5P,and Q. = 24 + 4P, Derive the following: Slope of the supply curve Paragraph + Lato (Recom.. s Question 32 (1 point) Assume the following demand and supply equations: Q4 =70 - 5P, and Q. = 24 + 4P. Derive the following: Y intercept of the supply curve Paragraph Lato (Recom... - Question 33 (1 point) Assume the following demand and supply equations: Q4 = 70 - 5P, and Q. = 24 + 4P. Derive the following: X intercept of the supply curve Paragraph Lato (Recom... Question 34 (1 point) Assume the following demand and supply equations: Q4 = 70 - 5P, and Q. = 24 + 4P, Calculate the equilibrium price and equilibrium quantity Paragraph + Lato (Recom... Question 35 (1 point) Assume the following demand and supply equations: Q4= 70 - 5P, and Q. = 24 + 4P. Graph the two curves (clearly label your axes and curves) *You may handwrite the graph, take the picture and upload using the Add File button below. Paragraph Lato (Recom... Question 36 (5 points) Using the midpoint formula, calculate the price elasticity of demand. Is it elastic or inelastic demand and why? (5 points) Price (S) Quantity Demanded (units) P1 = 7 Q1 = 20 P, = 4 Q2 = 30 Paragraph BIUV A/ EVEY + Lato (Recom... v 19px ... C Question 37 (5 points) Using the basic formula, calculate the price elasticity of supply. Is it elastic or inelastic supply and why? (5 points) Price ($) Quantity Supplied (units) P1 = 2 Q1 = 15 P, = 9 Q2 = 45 Paragraph BIU EVEY + Lato (Recom... v 19px ... Ea > C