QUESTION 3

Casey operates a stall in a seafood market that is highly competitive. She earns $2,000/day, with a stall hire cost of $100/day. As a result of a positive change in consumer preferences for seafood, Casey experiences a large increase in demand for her seafood.

Select the item from the list provided to make the following statements true:

• Casey's daily accounting profit is __________.
• Casey was making an economic loss in this market prior to the change in consumer demand. Fortunately, no new entrants arrive in the market with the increase in demand for seafood.If Casey manages to now achieve a normal profit in the short run, then Casey would definitely be making a / an________.
• The stall hire cost is a/an__________for Casey.

1.Accounting profit

2.-$2000/year

3.Total cost

4.Economic profit

5.Economic loss

6.A normal profit

7.$12000/year

8.$33000/year

9.Explicit cost

10.$45000/year

11.$1900

12.Implicit cost

QUESTION 4

Maddie is deciding whether or not she should take up a new job in retail, or keep her current job as a babysitter. As a babysitter Maddie earns $163 per week whereas the retail job would enable her to earn $356 per week. Maddie gains an additional $30 per week benefit from working with children as she intends to become a child psychologist in the future.

What is Maddie's weekly economic loss as a babysitter? Enter your answer as a positive value to the nearest whole number (with no decimal places, $ or - signs, spaces or commas).

QUESTION 5

Over the past few years, Australian residential properties have attracted considerable interest from foreign investors. This has resulted in a significant increase in the number of new apartment developments, particularly in Fortitude Valley and Newstead.

Answer the following questions:

1. Metro Properties is currently producing apartments that result in its marginal cost being lower than the market price of apartments.Taking the apartment construction industry as being perfectly competitive, this suggests Metro Properties should the quantity of apartments that it is currently constructing to maximise economic profits.Type I for Increase, D for Decrease or M for Maintain.
2. Assume Metro Properties currently sells 42 apartments per year in Newstead for an average of $570,000. If the average total cost (which includes opportunity cost) is equal to 70% of the sale price, what is the economic profit generated by Metro's Newstead operations in millions of dollars to three decimal places? $ million. Answer in millions of dollars (with three decimal places).
3. If other construction firms are able to copy Metro's operations, it is likely these other firms will the Newstead apartment market. Type E for Enter or X for Exit.

QUESTION 6

Sometimes a government can create a monopoly through legislation. For example, Australia Post has a legal monopoly over the carriage and delivery of letters up to 250 grams.

1. Government regulation is never able to control monopoly power.
2. Through government regulation, prices to send letters can be controlled.
3. Governments regulate monopolies in an effort to improve economic efficiency.

Which of the above statements are true:

• Only 1 is true.
• Only 2 is true.
• Both 1 and 2 are true.
• Both 2 and 3 are true.
• All three are true.

QUESTION 7

Fjllrven is a Swedish company that makes products to prepare customers for the outdoors. One of Fjllrven's products is the Knken backpack, which is completely waterproof. The backpack is revolutionary in its design, hence it can be assumed that Fjllrven has a monopoly.Assume demand for their backpack is linear and they sell a quantity that maximises profit.

Which of the following statements are true:

1. Fjllrven's marginal revenue curve is twice as steep as their demand curve.
2. The priceFjllrven sells its backpack for would be determined by the demand for the backpack.
3. The maximum profit could be calculated as marginal revenue minus marginal cost.
4. Fjllrven is a price maker.

QUESTION 8

Jen is the only seller of bottled water at the Brisbane Entertainment Centre. There are no close substitutes available.Patrons are not allowed to bring any form of bottled water to the venue.

Select the item from the list provided to make the following statements true:

• The extent of thedeadweightloss created by Jen's monopoly depends on herability to set price.This is also referred to as__________.
• As a monopolist, Jen will be able to set the price of bottled water so that her profit is_____.
• If monopolistic competition existed for drinks at this Entertainment Centre, the available products would be _______.

1.Supply

2.Government regulators

3.Economic profits

4.Marginal revenue

5.Demand

6.Minimised

7.Deadweight loss

8.Maximised

9.Differentiated

10.Opportunity costs

11.Market power

12.Marginal cost

QUESTION 9

Charlie has invented an ice-cream that never melts.As it is the first of its kind and currently hard to replicate, Charlie operates as a profit maximising monopolist.His marginal cost of production for each tub of ice-cream is $18 per tub. Below is a table of potential prices he could charge for each tub of ice-cream and the corresponding quantities.

Price ($/tub) Quantity (tubs)

30 10

28 20

26 30

24 40

22 50

20 60

What is Charlie's revenue at the profit maximising level of production?Answer to the nearest whole number (with no decimal places or $ sign).