Q4. (2 points)

A monopolistically competitive firm is currently producing 20 units of output. At

this level of output the firm is charging a price equal to $20, has marginal revenue

equal to $12, has marginal cost equal to $12, and has average total cost equal to

$18. From this information we can infer that ... ( )

a. the firm is currently maximizing its profit.

b. the profits of the firm are negative.

c. firms are likely to leave this market in the long run.

d. All of the above are correct.

Q5. (2 points)

Which of the following conditions is characteristic of a monopolistically competitive

firm in short-run equilibrium? ( )

a. P = AR

b. MR = MC

c. P > MC

d. All of the above are correct.

Q6. (2 points)

Assume that ?? has an upward-sloping labor supply curve. If the opportunity

cost of ??'s leisure time increases, then he will respond by working ... ( )

a. more hours.

b. fewer hours.

c. an equal number of hours.

d. a number of hours that cannot be determined from the information. The labor

demand curve is needed to make this determination.

Q7. (2 points)

Your college roommate receives a pay raise at her part-time job from $9 to $11

per hour. She used to work 25 hours per week, but now she decides to work 20

hours per week in order to spend more time studying economics. For this price

range, her labor supply curve is ... ( )

a. vertical.

b. horizontal.

c. upward sloping.

d. downward sloping.

Q8. (2 points)

As a result of a fire, a small business owner loses some of her computers and other

equipment. If the property of diminishing returns applies to all factors of production,

she should expect to see ... ( )

a. an increase in the marginal productivity of her remaining capital and an increase

in the marginal productivity of her labor.

b. an increase in the marginal productivity of her remaining capital and a decrease

in the marginal productivity of her labor.

c. a decrease in the marginal productivity of her remaining capital and an increase

in the marginal productivity of her labor.

d. a decrease in the marginal productivity of her remaining capital and a decrease

in the marginal productivity of her labor.

Q9. (6 points)

A small town AAA is famous for its apple production. There is a labor market for

apple pickers, and now it is at the equilibrium like the below graph in the town.

With this information, answer the following questions, Q9-A ~ Q9-C.