QUESTION 7

Use the information below for the next five questions.

After apocalyptic times, Rick and Negan open up a smoothie shop, which is a competitive market. The marginal revenue is $4. Rick & Negan sell 50 smoothies, have an average total cost of $4 and a fixed cost of $100.

What is their current total revenue?

	A.	$0
	B.	$400
	C.	$200
	D.	Not enough information is given

QUESTION 8

What is their marginal cost? (at producing 50 smoothies vs 0 smoothies)

	A.	$1
	B.	$3
	C.	$4
	D.	$2

QUESTION 9

What is their average variable cost? (at Q = 50)

	A.	$0.50
	B.	$1
	C.	$2
	D.	$1.50

QUESTION 10

Is the situation described above in a long-run equilibrium?

	A.	Not enough information!
	B.	Nope!
	C.	Yes!

QUESTION 11

If there are 50,000 smoothies sold in the market as a whole in an long-run equilibrium, how many producers are there? What are each producer's profits?

	A.	We can't figure out the # of producers, but each producer's profits are positive.
	B.	There are 500 producers, and each producer's profits are positive.
	C.	There are 100 producers, and each producer's profits are $0.
	D.	There are 1000 producers, and each producer's profits are $0.

QUESTION 12

The cash fare of Raleigh's GoRaleigh bus is currently at $1.25 per ride. Suppose the city council is thinking about raising the fare to $2.50 to generate more revenue. The council has asked for your advice as a student of economics. What needs to be true in terms of price effect and output effect for the revenue to increase?

	A.	Price effect = output effect
	B.	Price effect
	C.	None of the above
	D.	Price effect > output effect

QUESTION 13

Suppose that AMC Movies & Coca Cola are monopolies in Raleigh NC. That is, AMC Movies is the only provider of movies and Coca Cola is the only provider of Coke in our city. If AMC Movies can perfectly price discriminate and Coca Cola cannot, which of the following is true about profits? (You can assume that the demand and supply curve are exactly the same, as well as costs).

	A.	AMC Movies's profits are larger than Coca Cola's
	B.	The two companies' profits are the same
	C.	Coca Cola's profits are larger than AMC Movies's

QUESTION 14

Using the same information from the previous question, which of the following is not true?

	A.	Consumer surplus is higher in the market for Cokes
	B.	AMC will charge multiple prices,while Coke will charge only one price.
	C.	AMC Movies's market is efficient.
	D.	Coke's market is efficient

QUESTION 15

Let's think about monopolies, oligopolies, and competitive markets. Rank the profits that a typical firm in each market would earn. Rank the typical quantity that would be produced in these three markets.

	A.	Profits produced would be highest under competitive markets, then oligopolies, then monopolies. Quantities produced would be highest under monopolies, then competitive markets, then oligopolies.
	B.	Profits produced would be highest under monopolies, then oligopolies, then competitive markets. Quantities produced would be highest under monopolies, then competitive markets, then oligopolies.
	C.	Profits produced would be highest under competitive markets, then oligopolies, then monopolies. Quantities produced would be highest under competitive markets, then oligopolies, then monopolies.
	D.	Profits produced would be highest under monopolies, then oligopolies, then competitive markets. Quantities produced would be highest under competitive markets, then oligopolies, then monopolies.

QUESTION 16

Under which scenario would the consumer be better off (think about consumer surplus)? Under which scenario would the monopolist be better off (think about producer suprplus)?

	A.	Under a monopolist marketfor the buyer,under a monopolist market with perfect price discrimination for the seller.
	B.	Under a monopolist market with a single price (for both questions).
	C.	Under a monopolist market with perfect price discrimination for the buyer, under a monopolist market with a single price for the seller.
	D.	Under a monopolist market with perfect price discrimination (for both questions).