Question 1

Table 13-2 Adrianne's Premium Packaging Service subcontracts with a chocolate manufacturer to box premium chocolates for their mail-order catalogue business. She rents a small room for $250 a week in the downtown business district that serves as her factory. She can hire workers for $275 a week.

Number of Workers	Chocolates Produced per Week	Marginal Product of Labour	Cost of Factory	Cost of Workers	Total Cost
0	0
1		300	$250	$275	$525
2	630
3		150		$825	$1075
4	890
5	950	60		$1375
6		10			$1900

Refer to Table 13-2. One week, Adrianne earns a profit of $125. If her revenue for the week is $100, how many boxes of chocolate did she produce?

A.	140
B.	330
C.	780
D.	950

2. Are the decisions to shut down and exit a market short-run or long-run decisions?

A.	The decision to shut down and the decision to exit are both short-run decisions.
B.	The decision to shut down and the decision to exit are both long-run decisions.
C.	The decision to shut down is a short-run decision, whereas the decision to exit is a long-run decision.
D.	The decision to exit is a short-run decision, whereas the decision to shut down is a long-run decision.

3. The competitive firm's long-run supply curve is that portion of the marginal-cost curve that lies above which average cost?

A.	fixed cost
B.	variable cost
C.	total cost
D.	sunk cost

4. In the long-run equilibrium of a competitive market, the number of firms in the market adjusts so that all of the market demand is satisfied. At what price would this happen?

A.	at the minimum value of the marginal cost
B.	at the maximum value of marginal cost
C.	at the minimum value of average total cost
D.	at the minimum value of average variable cost

5. 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 average total cost?

A.	$5
B.	$6
C.	$10
D.	$20

Question 6

Table 14-6 There are 500 identical firms in a competitive market. The firms do not use any resources that are available in limited quantities, and all of them have the following cost structure:

Output	Total Cost
0	$5
1	$10
2	$12
3	$15
4	$22
5	$40

Refer to Table 14-6. What is the shape of the long-run supply curve for this market?

A.	horizontal at a price of $2.00
B.	horizontal at a price of $3.33
C.	horizontal at a price of $5.00
D.	horizontal at a price of $7.00