QUESTION 1 You are deciding whether you should leave your current job as a barista at a caf and work as a store assistant at a retail shop. Which of the following statements is true? @ |If you accounting profit is positive while you economic profit is negative in becoming a store assistant, you should stay at your current job O If your accounting profit of being a barista is zero, it means that your accounting profit is equal to your opportunity cost of working at your current job. O When calculating your economic profits, you should only include your explicit costs. O Your explicit costs include the value of working as a store assistant. O You should only look at the salary difference between the two jobs when deciding. QUESTION 2 Patrice runs her own business selling art deco furniture. She receives $7,000/week from sales, with business related expenses being $5,500/week. Patrice previously worked as a musician before selling furniture, with take home pay of $1500/week. Which of the following statements are true? [ patrice is earning a normal profit from choosing to sell furniture. ([ Patrice's accounting profit from selling furniture is $1,500/week. [ There is an incentive for Patrice to leave the market for furniture and return to being a musician. [ Patrice's economic profit in this situation is equal to $0/week QUESTION 3 Hamid currently owns an apricot farm which in the past has been highly profitable with revenues of $85,000/year. Recently, a major tornado destroyed all his apricot trees and also destroyed a large amount of his specialised apricot packaging equipment. Costs are estimated to be at least $30,000 to replace the specialised equipment he needs to package the apricots. He is trying to decide whether to replant new apricot trees or to plant lime trees instead. He does not need the specialized packaging equipment if he is selling limes. Select the item from the list provided to make the following statements true. accounting profit economic resurgence implicit cost economic profit economic loss normal profit economic imbalance implicit and explicit cost . explicit cost 10. $45000/year 11. total cost - v For Hamid to consider leaving the apricot market, he must be experiencing a/an - v If Hamid chose to replant and grow apricots, he would know he made the correct decision in later years if he makes a/an - v From an economic perspective, a/an for Hamid in growing apricots would be his opportunity cost. 001 N oy A Bl e QUESTION 4 Phoebe works as a driver for a ridesharing company that transports passengers around Brisbane. She currently earns revenues of $4663 per month. The only costs associated with working as a driver are fixed costs for car registration and maintenance of $11732 per year. As a result of a large shift in demand towards food delivery, Phoebe is deciding whether or not to start using her car to make food deliveries rather than transporting passengers for the ridesharing business. She estimates her revenues from delivering food will be $6735 per month. What is Phoebe's monthly economic loss from transporting passengers for the ridesharing company? Assume the same fixed registration and maintenance costs apply to the ridesharing option as well as the food delivery option, as Phoebe would continue to use her own car under either scenario. Answer as a positive number to the nearest whole value (with no decimal places, $ or signs, spaces or commas). QUESTION 5 Many Australians love freshly baked pastries together with a cup of freshly brewed coffee. In Brisbane, we can find many pastries and dessert shops selling delicious pastries and baked goods. Assume this market to be a perfectly competitive one. Answer the following questions: a. Jasmine runs a pastry shop in Brisbane. She discovers a new oven that can help her bake pastries faster, greatly reducing her costs as compared to her competitors. In the short run, Jasmine will be able to earn a/an 'prolv Type E for Economic, X for No or N for Normal b. Itis given that Jasmine's shop faces an average total cost of $2.60 per pastry baked. The average fixed cost is $2.15 per pastry. On an average day, Jasmine can sell up to 225 pastries. Each pastry can be sold for $3.49. Calculate Jasmine's economic profit for an average day. . Answer in dollars to the nearest two decimal places. . Many shops now started using the new oven which lowered their production costs. With a lower cost, shops are selling pastries at a lower price. Assume prices now are $2 per pastry. Jasmine decides to start selling more pastries in order to increase her revenue, which she hopes will increase her profits. Does this make economic sense?[ . Type Y for Yes or N for No. QUESTION 6 TikTok's monthly users grew from 680 million monthly active users in November 2018 to over 1.1 billion monthly active users in February 2021. The site dominates the online social networking market, out-performing rivals Facebook and Twitter. 1. The growth of TikTok can in part be explained by network externalities. 2. TikTok will be certain to dominate this market now that it has an entrenched position. 3. TikTok's usefulness to each individual user increases as the total number of users increases. Which of the above statements are true: O Only 1is true. O Only 2is true. O Both 1and 3 are true. O Both 2 and 3 are true. O All three are true. QUESTION 7 Harry is a magician who performs impressive tricks that no other magician can perform. His tricks are so unique that he can operate as a monopoly in the special magic show business. Assume demand for his magic shows is linear and that he aims to maximise profits. Which of the following statements are true: (J The quantity of magic shows Harry performs needs to be such that price equals marginal cost. (J Harry is a price maker. (J The price Harry charges will be equal to his marginal revenue. () Harry's demand curve is twice as steep as his marginal revenue curve. QUESTION 8 Tara is a dentist in a rural town. The next available dentist is 250 kilometres away. Assume that the demand for her services are linear. Select the item from the list provided to make the following statements true: her services are completely identical to others consumer surplus consumer budget twice as steep as twice as flat as there are no close substitutes inverse of marginal benefit 9. dead weight loss 10.there are many barriers to entry 11.the same as 12. her services are slightly differentiated - Vv Tara's marginal revenue curve is her demand curve. - If Tara prices her services near where her marginal cost curve intersects with her demand curve implies that she will minimise - If Tarais practicing in Brisbane with many other dental services available near her, then Tara is operating within a monopolistic competition because PN QUESTION 9 Dr. Krieger is the only bionic arm specialist on the remote pacific island of Pangu. Because he is the only specialist, and because of the island's remoteness, Dr Krieger operates as a profit maximising monopolist. His marginal cost of production for each bionic arm is $5000 per arm. Below is a table of potential prices he could charge for each bionic arm that he fits, and the corresponding quantities sold in a given year. Price ($/bionic Quantity arm) (bionic arms) 15000 10 13000 15 11000 20 9000 25 7000 30 5000 35 What is Dr. Krieger's profit-maximising quantity? Answer to the nearest whole number of bionic arms (with no decimal places) QUESTION 10 Steven works miracles as an animal chiropractor, specialising in dogs and horses, and is the only qualified animal chiropractor in the Wagga Wagga area in New South Wales. Each chiropractic treatment costs him $78 to conduct (ie: his marginal cost is constant at $78/treatment). Below is a table of the potential prices he could charge and the corresponding quantities. Price Quantity ($/treatment) (treatments) 200 5 180 7 162 10 148 12 130 15 124 16 Although Steven can exert monopoly power, he decides he will set a price of $180 per treatment (without consulting any economic concepts). Answer the following questions: a. What is Steven's marginal revenue when the price is $180 per treatment? Answer to the nearest whole number (with no decimal places). $' \\/lrea(menl, b. At $180 per treatment, should Steven decrease or increase the number of treatments to maximise profit? ' Type D for Decrease or | for Increase. c. Calculate the number of treatments Steven should conduct to maximise profit. Answer to the nearest whole number (with no decimal places). ' ) treatments. Question 2: 1. False. If Patrice's total revenue covers her business expenses, including normal returns to entrepreneurship, she is earning a normal profit, not an economic profit. 2. False, Accounting profit includes only explicit costs, not opportunity costs or implicit costs. 3. True. If Patrice can earn more from her previous job as a musician compared to her current business, there might be an incentive for her to leave the furniture market. 4, True. Economic profit considers total revenue minus both explicit and implicit costs, which in this case results in zero economic profit. Question 3: 1. accounting profit 2. economic resurgence 3. implicit cost 4, economic profit Question 4: Phoebe's monthly economic loss from transporting passengers: 4663 6735 517 ~ $144 Question 5: a. Type E for Economic b. Economic profit: (3.49 2.00 2.16) x 225 = $277.25 c. Yes, it makes economic sense to increase sales to increase revenue and potentially profits, Question 6: Only statement 3 is true. Question T: Only statement 2 is true. Question 8: 1. her services are completely identical to others 2. consumer surplus. 3. consumer budget 4. twice as steep as Question 9: The profit-maximizing quantity is 10 bionic arms. Question 10: a. Marginal revenue at $180 per treatment is also $180. b. Increase. c.12 treatments. Question 1: 1. False. If accounting profit is positive but economic profit is negative, it suggests that the opportunity cost of the alternative option (store assistant) is higher than the benefits gained, so it might be better to stay as a barista. 2. True. When accounting profit is zero, it implies that all explicit costs are covered, leaving no surplus, which means the opportunity cost (implicit cost) is equal to the accounting profit. 3. False. Economic profit considers both explicit and implicit costs, not just explicit costs. 4. True. Explicit costs include the value of working as a store assistant because it represents the tangible expenses associated with that option. 5. False. Salary difference is only one factor to consider; opportunity costs and all relevant costs should be taken into account