Economics, 11e, Global Edition (Parkin)Part 4 Review1 Firms and Markets1) Ms. Lollipop opened a candy store in December 2013. She rented a building for $25,000 a year and used $30,000 from her savings account, which earned an annual interest rate of 5 percent, to buy capital equipment. In December 2014, the market value of her capital equipment was $26,000. What is the economic depreciation of Lollipop's capital?A) $3,000B) $4,000C) $1,000D) $25,000Answer: BTopic: Economic DepreciationSkill: ConceptualStatus: Previous edition, Part Review 4AACSB: Analytical Skills2) Ms. Lollipop opened a candy store in December 2013. She rented a building for $25,000 a year and used $30,000 from her savings account, which earned an annual interest rate of 5 percent, to buy capital equipment. During the first year of operation, Lollipop paid $28,000 to her employees, $10,000 for utilities, and $16,000 for goods she bought from other firms. In December 2014, the market value of Lollipop's capital equipment was $26,000. Lollipop's best alternative to running her candy store is to work as a sales clerk at Winn-Dixie for $15,000 a year. What is Lollipop's total opportunity cost?A) $99,500B) $94,000C) $79,000D) $20,500Answer: ATopic: Opportunity CostsSkill: ConceptualStatus: Previous edition, Part Review 4AACSB: Analytical Skills3) Ms. Lollipop ope ned a candy store in December 2013. She ren ted a build ing for $25,000 a year and used $30,000 from her sav ings accou nt, which ear ned an ann ual in terest rate of 5 perce nt, to buy capital equipment. During the first year of operation, Lollipop paid $28,000 to her employees, $10,000 for utilities, and $16,000 for goods she bought from other firms. In December 2014, the market value of Lollipop's capital equipme nt was $26,000. Lollipop's best alter native to running her candy store is to work as a sales clerk at Winn-Dixie for $15,000 a year. What is Lollipop's econ omic profit?A) $21,000B) $500C) $5,000D) -$9,000An swer: BTopic: Economic ProfitSkill: ConceptualStatus: Previous edition, Part Review 4AACSB: Analytical Skills4) In the table above, what is the marg inal product of the 5th worker?A) 190 units per weekB) 4 un its per weekC) 20 un its per weekD) 38 un its per weekAn swer: CTopic: Marginal Product of LaborSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills5) Give n the in formati on in the table above, suppose labor is the only variable in put. The price of labor is $400 per week and total fixed costs are $1,000 per week. What is the total cost of produci ng 100 un its?A) $1,700B) $1,800C) $1,900D) $2,000An swer: BTopic: Total CostSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills6) Given the information in the table above, suppose labor is the only variable input. The price of labor is $400 per week and total fixed costs are $1,000 per week. If 170 units are produced, the average total cost isA) $15.29.B) $5.88.C) $9.41.D) $7.99 Answer: ATopic: Average Total CostSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills7) Given the information in the table above, suppose labor is the only variable input. The price of labor is $400 per week and total fixed costs are $1,000 per week. What is the marginal cost of producing the 120th unit?A) $400.00B) $40.00C) $20.00D) $10.00 Answer: DTopic: Marginal CostSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills8) Given the information in the table above, suppose labor is the only variable input. The price of labor is $400 per week and total fixed costs are $1,000 per week. If the firm wants to minimize its average total cost, it should produceA) 100 units.B) 140 units.C) 170 units.D) 190 units.Answer: CTopic: Average Total CostSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills9) The profit maximizing condition for any competitive firm isA) MR = P.B) MC = MR.C) P = ATC.D) None of the above answers is correct because each type of competitive firm has a different condition of maximizing its profit.Answer: BTopic: Profit MaximizationSkill: ConceptualStatus: Previous edition, Part Review 4 AACSB: Reflective Thinking10) Firms in which of the following industries can incur an economic loss in the short run?A) Any firm can in cur an econo mic loss profit in the short run.B) only perfect competiti on and mono polistic competiti onC) only mono polistic competiti onD) only perfect competiti onAn swer: ATopic: Economic LossSkill: ConceptualStatus: Modified 10th editionAACSB: Reflective Thinking11) Which of the followi ng stateme nts is FALSE? __A) In the short run, a monopolist might operate even though it is incurring an economic loss, but in the short run a perfectly competitive firm always shuts down if it is incurring an economic loss.B) A monopoly can earn an economic profit in the long run, but a perfectly competitive firm cannot.C) A mono poly can set its price while a perfectly competitive firm cannot.D) A mono poly is protected by barriers to en try while a perfectly competitive firm is not.An swer: ATopic: Single-Price Monopoly's Output and Price DecisionsSkill: ConceptualStatus: Previous edition, Chapter 13AACSB: Reflective Thinking12) Vito's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $22.50 per pizza, what is Vito's profit-maximizing output?A) 2 pizzas per dayB) 3 pizzas per dayC) 4 pizzas per dayD) 5 pizzas per dayAn swer: CTopic: Profit-Maximizing OutputSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills13) Vito's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $22.50 per pizza, how much economic profit per day does the firm make?A) zeroB) $10C) $20D) -$7.50Answer: BTopic: Profit-Maximizing OutputSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills14) Vito's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $17.50 per pizza, what is Vito's profit-maximizing output?A) 2 pizzas per dayB) 3 pizzas per dayC) 4 pizzas per dayD) 5 pizzas per dayAnswer: BTopic: Profit-Maximizing OutputSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills15) Vito's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $17.50 per pizza, how much economic profit does the firm make?A) zeroB) $10C) -$7.50D) $15Answer: CTopic: Profit-Maximizing OutputSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills16) Vito's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. What is Vito's shut-down point?A) $10.00 per pizzaB) $12.50 per pizzaC) $15.00 per pizzaD) $17.50 per pizzaAnswer: BTopic: Profit-Maximizing OutputSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical SkillsQuantity (unite per day)17) For the monopoly shown in the figure above, the profit maximizing output isA) 20 un its.B) more tha n 40 un its and less tha n 60 un its.C) 40 un its.D) 60 un its.An swer: CTopic: Single-Price Monopoly's Output and Price DecisionsSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills18) For the monopoly shown in the figure above, the profit maximizing price isA) less than $1.00.B) $3.00.C) $4.00.D) $6.00.An swer: DTopic: Single-Price Monopoly's Output and Price DecisionsSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills19) For the monopoly shown in the figure above, the maximum total economic profit isA) zero.B) $32.C) $80.D) $240.An swer: CTopic: A Monopoly's Economic ProfitSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills20) For the monopoly shown in the figure above, the markup isA) zero.B) $1.C) $2.D) $4.Answer: CTopic: MarkupSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills21) For the monopoly shown in the figure above, the efficient output level isA) 20 units.B) more than 40 units and less than 60 units.C) 40 units.D) 60 units.Answer: BTopic: Comparing Output and PriceSkill: AnalyticalStatus: Previous edition, Part Review 4 AACSB: Analytical Skills22) The firm show n in the figure above isA) not a n atural mono poly because it experie nces disec ono mies of scale where itsLRAC curve in tersects the dema nd curve.B) a n atural mon opoly because it experie nces econo mies of scale where itsLRAC curve in tersects the dema nd curve.C) a n atural mono poly because its marg inal cost is con sta nt, so it experie nces con sta nt returns to scale. D) not a n atural mono poly because its LRAC curve is above its MC curve.An swer:B Topic: Natural Monopoly Skill: RecognitionStatus: Previous edition, Part Review 4AACSB: Analytical Skills23) If the firm in the figure above is unregulated, it will charge a price ofA) $4 per un it.B) $16 per un it.C) $20 per un it.D) $40 per unit.An swer: CTopic: Natural Monopoly, UnregulatedSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills24 )6328200 400 600 800 1 0Q0Quontity (units per 日口IT? AC24) If the firm in the figure above is unregulated, it will produceA) 500 units per day.B) 600 units per day.C) 900 units per day.D) zero units.Answer: ATopic: Natural Monopoly, UnregulatedSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills25) If the firm in the figure above is unregulated, the deadweight loss will beA) zero.B) $1,800.C) $3,200.D) $16,200.Answer: CTopic: Natural Monopoly, UnregulatedSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills26) If a marginal cost pricing rule is imposed on the firm in the figure above, the price will beA) $4 per unit.B) $16 per unit.C) $20 per unit.D) $40 per unit.Answer: ATopic: Natural Monopoly, Marginal Cost Pricing RuleSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills27) If a marginal cost pricing rule is imposed on the firm in the figure above, the firm will produceA) 500 units per day.B) 600 units per day.C) 900 units per day.D) zero units.Answer: CTopic: Natural Monopoly, Marginal Cost Pricing RuleSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills28) If a marginal cost pricing rule is imposed on the firm in the figure above, the firm's economic profit isA) zero.B) $1,000.C) -$7,200.D) $320. Answer: CTopic: Natural Monopoly, Marginal Cost Pricing RuleSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills29) If a marginal cost pricing rule is imposed on the firm in the figure above, the deadweight loss will beA) zero.B) $1,800.C) $3,200.D) $16,200. Answer: ATopic: Natural Monopoly, Marginal Cost Pricing RuleSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills30) If an average cost pricing rule is imposed on the firm in the figure above, the price will beA) $4 per unit.B) $16 per unit.C) $20 per unit.D) $40 per unit.Answer: BTopic: Natural Monopoly, Average Cost Pricing RuleSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills31) If an average cost pricing rule is imposed on the firm in the figure above, the firm will produceA) 500 units per day.B) 600 units per day.C) 900 units per day.D) zero units. Answer: BTopic: Natural Monopoly, Average Cost Pricing RuleSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills32) If an average cost pricing rule is imposed on the firm in the figure above, the firm's economic profit isA) zero.B) $1,000.C) -$7,200.D) $320. Answer: ATopic: Natural Monopoly, Average Cost Pricing RuleSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills33) If an average cost pricing rule is imposed on the firm in the figure above, the deadweight loss isA) zero.B) $1,800.C) $3,200.D) $16,200. Answer: BTopic: Natural Monopoly, Average Cost Pricing RuleSkill: AnalyticalStatus: Previous edition, Part Review 4AACSB: Analytical Skills34) Monopolistic competition is a market structure in which a ______ number of firms compete andeach firm produces _______ product.A) large; an identicalB) small; an identicalC) large; a differentiatedD) small; a differentiated Answer: CTopic: Monopolistic CompetitionSkill: ConceptualStatus: Previous edition, Part Review 4AACSB: Reflective Thinking35) In some industries it is important for each firm to predict how all the other firms will react to their decisions.A) This is not true for monopolistic competition because there are too many firms and no barriers to entry.B) This is not true of any industry with barriers to entry.C) This is not true for monopolistic competition because firms do not sell homogeneous goods.D) This is true for oligopoly because these firms sell a homogeneous good. Answer: ATopic: OligopolySkill: ConceptualStatus: Previous edition, Part Review 4AACSB: Reflective Thinking36) Oligopoly is a market structure in which a ______ number of firms compete and there _______ barriers to entry.A) small; areB) large; areC) small; are noD) large; are noAnswer: ATopic: OligopolySkill: ConceptualStatus: Previous edition, Part Review 4AACSB: Reflective Thinking37) A cartel tries to _______ its members' economic profit and thereby the cartel _______ consumer surplus.A) increase; increasesB) increase; decreasesC) decrease; increasesD) decrease; decreasesAnswer: BTopic: CartelSkill: AnalyticalStatus: Previous edition, Chapter 15AACSB: Reflective Thinking38) Cheating by a member of a cartel ______ consumer surplus and ______ the total economic profit earned by all the firms in the cartel.A) increases; increasesB) increases; decreasesC) decreases; increasesD) decreases; decreasesAnswer: BTopic: CartelSkill: AnalyticalStatus: Previous edition, Chapter 15AACSB: Reflective Thinking11。