Question
TCC is considering adding a new degree program: Drone Pilot Certification. What would be a specific fixed cost in this decision?Explain why. What would be
TCC is considering adding a new degree program: Drone Pilot Certification.
What would be a specific fixed cost in this decision?Explain why. What would be a specific variable cost in this decision? Explain why. Which one of these costs should be ignored in the decision? Explain why.
2. In Pure Competition if a firm is making an economicprofit today, what will happen
to those economic profits in the long run? Why?Would the same be true for
a monopoly firm making economic profits today? Explain why. A firm in pure
competition may suffer losses in the short run but not in the long run as it
will eventually go out of business. Would this be true for a monopoly firm
as well? Explain your answer.
3. State the Law of Diminishing Marginal Output (or Diminishing Marginal Product) associated with the production of a good. Hoping to expand his number of clients, Sam's Gym has decided to hire ten more personal trainers. In hiring these additional ten personal trainers, does Sam need to worry about the Law of Diminishing Marginal Returns applying to his gym? Fully explain your answer.
4. Explain what action a monopoly firm often will take to get a high price for its product.
In addition to obtaining a patent or copyright, list and fully explain two other ways a firm may gain monopoly power in the marketplace.
5. In addition to in-state tuition, give a specific example of when you have personally benefitted from price discrimination. Give two reasons why Ben, a landscaper, is in a better position to practice price discrimination than Ted, who has a hardware store that sells plants and grass seed.
6. ANSWER EITHER"A" OR "B."
A. Nancy's Dress Shop had sales revenue last year of $400,000 and accounting (bookkeeping) costs of $360,000, so her before-tax accounting profit was $40,000. Her daughter, Janice, who is taking ECONOMICS 202, tells her she suffered an economic loss of $10,000. Using some specific cost terms and some numbers, explain why Nancy suffered an economic loss although she made an accounting profit.
B. Tell whether you agree or disagree with each of the following statements and give your reason:
a. "All monopolists are guaranteed to make a profit."
b. "In pure competition there is little or no product variety for the buyer."
c. "Firms in pure competition will move fast to meet a change in buyers' tastes."
1. Which of the following is normally a fixed cost for a firm?
A. Loan interest B. Transportation C.Materials D.Utilities
2. Which of the following is normally a variable cost for a firm?
A. Insurance B. Rent C. Property taxes D. Advertising
3. A firm that does not open today will have a loss = to its _________ cost.
A. Total B. Fixed C. Variable D.Marginal
4. In the real world, the closest example of pure competition would likely be
A. Ron's Book Shop C. Macy's Department Stores
B. Skippy Peanut Butter D. Madge's Blueberry Farm
5. Which of the following was NOT given as an advantage of pure competition
to society?
A. Cost savings from economies of scale C. Greatest level of output desired
B. Lowest production costs D. Lowest price to buyers
6. The marginal cost=marginal revenue rule to maximize profits appllies
A. Only to firms in pure competition
B. Only to monopoly firms
C. To all firms but monopolies
D. To all firms including monopolies
7. There will be no profits for a firm when
A. Price = Marginal cost C. Price = Average Total Cost
B. Marginal cost = marginal revenue D.Price = Marginal Revenue
8. Which of the following would be considered a natural monopoly?
A. Microsoft B.Amazon C. Virginia Natural Gas D.TCC bookstore
9. Which of the following is TRUE for a monopoly?
A. All monopolists are extremely common in the real world.
B. All monopolists face a perfectly (totally) inelastic demand curve.
C. To maximize profits, a monopolist will always charge the very highest price on its
demand curve.
D. Monopolies often have money to invest in new technology.
E. All of the above
10. Which is an example of price discrimination as defined in class.
A. Farm Fresh selling Crest Toothpaste (6 oz) for $2 and Kroger selling Crest Toothpaste (6 oz) for $3.
B. Wal-Mart selling a two-liter Coke for 89 cents and selling a two-liter Pepsi for 99 cents.
C. Discounts given to military veterans and also to seniors,
D. Roger's Fencing Company, which charges customers according to the height and length of the fence.
E. All of the above.
11. Marginal cost has no relationship (no connection whatsoever)to which of the following
A. Total costs C. Variable costs
B Fixed costs D. " A" and "C"
12. To open today, a firm must be able to cover its ____________ cost.
A. Fixed B. Variable C. Total D. None of these
13. Which of the following is TRUE about a monopoly?
A. The price of the good and the marginal revenue are always the same.
B. The marginal revenue will be more than (above) the price.
C. The marginal revenue will be less than (below) the price.
D. "D" answer currently out of stock.
14. Which of the following has the most monopoly power over its prices?
A. Wal-Mart for its groceries.
B. General Motors for its cars and trucks.
C. TCC Records Office for official college transcripts.
D. McDonalds for its Big Mac.
15. Which of the following could be an explicit cost for a firm?
A. Rent C. Labor cost E. All of these costs
B. Raw materials D. Loan interest
16. Economies of scale can come from a large firm being able to
A. Afford better equipment.
B. Afford more management specialization.
C. Afford a more efficient distribution system.
D. All of the above
17. When marginal productivity begins to decline, what will happen to marginal cost?
A. Marginal cost will go up. C. Marginal cost will be unaffected.
B. Marginal cost will go down. D. "D" answer password protected.
TCC is considering adding a new degree program: Drone Pilot Certification.
What would be a specific fixed cost in this decision?Explain why. What would be a specific variable cost in this decision? Explain why. Which one of these costs should be ignored in the decision? Explain why.
2. In Pure Competition if a firm is making an economicprofit today, what will happen
to those economic profits in the long run? Why?Would the same be true for
a monopoly firm making economic profits today? Explain why. A firm in pure
competition may suffer losses in the short run but not in the long run as it
will eventually go out of business. Would this be true for a monopoly firm
as well? Explain your answer.
3. State the Law of Diminishing Marginal Output (or Diminishing Marginal Product) associated with the production of a good. Hoping to expand his number of clients, Sam's Gym has decided to hire ten more personal trainers. In hiring these additional ten personal trainers, does Sam need to worry about the Law of Diminishing Marginal Returns applying to his gym? Fully explain your answer.
4. Explain what action a monopoly firm often will take to get a high price for its product.
In addition to obtaining a patent or copyright, list and fully explain two other ways a firm may gain monopoly power in the marketplace.
5. In addition to in-state tuition, give a specific example of when you have personally benefitted from price discrimination. Give two reasons why Ben, a landscaper, is in a better position to practice price discrimination than Ted, who has a hardware store that sells plants and grass seed.
6. ANSWER EITHER"A" OR "B."
A. Nancy's Dress Shop had sales revenue last year of $400,000 and accounting (bookkeeping) costs of $360,000, so her before-tax accounting profit was $40,000. Her daughter, Janice, who is taking ECONOMICS 202, tells her she suffered an economic loss of $10,000. Using some specific cost terms and some numbers, explain why Nancy suffered an economic loss although she made an accounting profit.
B. Tell whether you agree or disagree with each of the following statements and give your reason:
a. "All monopolists are guaranteed to make a profit."
b. "In pure competition there is little or no product variety for the buyer."
c. "Firms in pure competition will move fast to meet a change in buyers' tastes."
1. Which of the following is normally a fixed cost for a firm?
A. Loan interest B. Transportation C.Materials D.Utilities
2. Which of the following is normally a variable cost for a firm?
A. Insurance B. Rent C. Property taxes D. Advertising
3. A firm that does not open today will have a loss = to its _________ cost.
A. Total B. Fixed C. Variable D.Marginal
4. In the real world, the closest example of pure competition would likely be
A. Ron's Book Shop C. Macy's Department Stores
B. Skippy Peanut Butter D. Madge's Blueberry Farm
5. Which of the following was NOT given as an advantage of pure competition
to society?
A. Cost savings from economies of scale C. Greatest level of output desired
B. Lowest production costs D. Lowest price to buyers
6. The marginal cost=marginal revenue rule to maximize profits appllies
A. Only to firms in pure competition
B. Only to monopoly firms
C. To all firms but monopolies
D. To all firms including monopolies
7. There will be no profits for a firm when
A. Price = Marginal cost C. Price = Average Total Cost
B. Marginal cost = marginal revenue D.Price = Marginal Revenue
8. Which of the following would be considered a natural monopoly?
A. Microsoft B.Amazon C. Virginia Natural Gas D.TCC bookstore
9. Which of the following is TRUE for a monopoly?
A. All monopolists are extremely common in the real world.
B. All monopolists face a perfectly (totally) inelastic demand curve.
C. To maximize profits, a monopolist will always charge the very highest price on its
demand curve.
D. Monopolies often have money to invest in new technology.
E. All of the above
10. Which is an example of price discrimination as defined in class.
A. Farm Fresh selling Crest Toothpaste (6 oz) for $2 and Kroger selling Crest Toothpaste (6 oz) for $3.
B. Wal-Mart selling a two-liter Coke for 89 cents and selling a two-liter Pepsi for 99 cents.
C. Discounts given to military veterans and also to seniors,
D. Roger's Fencing Company, which charges customers according to the height and length of the fence.
E. All of the above.
11. Marginal cost has no relationship (no connection whatsoever)to which of the following
A. Total costs C. Variable costs
B Fixed costs D. " A" and "C"
12. To open today, a firm must be able to cover its ____________ cost.
A. Fixed B. Variable C. Total D. None of these
13. Which of the following is TRUE about a monopoly?
A. The price of the good and the marginal revenue are always the same.
B. The marginal revenue will be more than (above) the price.
C. The marginal revenue will be less than (below) the price.
D. "D" answer currently out of stock.
14. Which of the following has the most monopoly power over its prices?
A. Wal-Mart for its groceries.
B. General Motors for its cars and trucks.
C. TCC Records Office for official college transcripts.
D. McDonalds for its Big Mac.
15. Which of the following could be an explicit cost for a firm?
A. Rent C. Labor cost E. All of these costs
B. Raw materials D. Loan interest
16. Economies of scale can come from a large firm being able to
A. Afford better equipment.
B. Afford more management specialization.
C. Afford a more efficient distribution system.
D. All of the above
17. When marginal productivity begins to decline, what will happen to marginal cost?
A. Marginal cost will go up. C. Marginal cost will be unaffected.
B. Marginal cost will go down. D. "D" answer password protected.
Fill in the blank
1. A(n) ______________ profit is the minimum profit necessary to keep the
entrepreneur running his or her firm.
2. A(n) _________________ profit will be any profit greater than the above profit .
3. All costs will become ___________________________ in the long run.
4. ________________________ ________________________ occurs when a new
technology replaces an old technology.
5. A firm that does not open today will have a loss equal to its __________________.
6. __________________ cost is the opportunity cost to the owner to use the owner's
own resources to run the firm.
1. A(n) ______________ profit is the minimum profit necessary to keep the
entrepreneur running his or her firm.
2. A(n) _________________ profit will be any profit greater than the above profit .
3. All costs will become ___________________________ in the long run.
4. ________________________ ________________________ occurs when a new
technology replaces an old technology.
5. A firm that does not open today will have a loss equal to its __________________.
6. __________________ cost is the opportunity cost to the owner to use the owner's
own resources to run the firm.
PRODUCTION FUNCTION PROBLEM. Complete the following table.
| QUANTITY | TOTAL FIXED COST | TOTAL VARABLE COST | TOTAL COST | MARGINAL COST |
| 0 | $ | $ | $ 1 | XXXXXXXXX |
| 1 | $ | $ | $ 3 | $ |
| 2 | $ | $ | $ 6 | $ |
| 3 | $ | $ | $ 10 | $ |
| 4 | $ | $ | $ 15 | $ |
| 5 | $ | $ | $ 25 | $ |
If the price for this product is a constant $ 8, how much should the firm produce to
maximize profits or minimize losses?
The profit/loss at this level of output = $___________
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Economics Today
Authors: Roger LeRoy Miller
16th edition
132554615, 978-0132554619
