Microeconomic Principles Multiple choise Questions QUESTION 11 If the price faci
ID: 1194103 • Letter: M
Question
Microeconomic Principles Multiple choise Questions
QUESTION 11
If the price facing the firm in the figure above is P3, the firm's fixed cost is area
BP3DE.
AP3DF.
0AFQ4.
0Q4DP3.
ABEF
QUESTION 12
A firm has market power if it can
maximize profits.
minimize costs.
influence the market price of the good it sells.
hire as many workers as it needs at the prevailing wage rate.
QUESTION 13
In the figure above, at an output level of G, average fixed cost is
0DRT.
(CFLK)/T
F.
F-C.
(F)(G)
QUESTION 14
Consider a competitive market with 50 identical firms. Suppose the market demand is given by the equation QD = 200 - 10P and the market supply is given by the equation QS = 10P. In addition, suppose the following table shows the marginal cost of production for various levels of output for firms in this market.
How many units should a firm in this market produce to maximize profit?
1 unit
2 units
3 units
4 units
QUESTION 15
Refer to Table 14-12. At what quantity does Bill maximize profits?
3
6
7
8
QUESTION 16
In a market with 1,000 identical firms, the short-run market supply is the
marginal cost curve above average variable cost for a typical firm in the market.
quantity supplied by the typical firm in the market at each price.
sum of the prices charged by each of the 1,000 individual firms at each quantity.
sum of the quantities supplied by each of the 1,000 individual firms at each price.
BP3DE.
AP3DF.
0AFQ4.
0Q4DP3.
ABEF
Explanation / Answer
11. The area ABEF is the area which represents fixed costs for the firm. We know ATC=AVC+AFC or we can also deduce AFC=ATC - AVC from this so the corresponding area will be ABEF.
12. A firm has market power if it can affect or control the price of the commodities through its actions. so the correct option is influence the market price of the good it sells.
13. Figure not showing.
14.
For Price
200 - 10P = 10P
20P = 200
P = 10
At P=10, the
Quantity
q=200-10*10 = 100
MR=MC profit max condition 2 units may be produced.
Units MC TR(10*Units) MR 0 0 1 5 10 10 2 10 20 10 3 15 30 10 4 20 40 10 5 25 50 10