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ECN 212 HOMEWORK #3 Fall Semester, 2014




Question;HOMEWORK #3--MICROECONOMIC PRINCIPLES;ECN 212, Section 1006, LEC 85225--Fall Semester;2014;Dr.;Filer;TTh;1:30 P.M. to 2:45 P.M. in BAC 116;Due: End of class, Tuesday, November 25, 2014.;Multiple;Choice: Answer each of these questions;by darkening the bubble on your scantron sheet, as if you were taking an exam;in class. Hand in only the scantron;sheet. Make sure you have darkened in;your name and 10-digit ASU Affiliate ID number on the scantron sheet. YOU MUST USE THE (8 1/2 INCH BY 11 INCH);SCANTRON FORM 229633 BY EXAM SYSTEM IIAVAILABLE IN THE ASU;BOOKSTORE. NO OTHER TYPE OF SCANTRON;WILL BE ACCEPTABLE.;Use;the following to answer questions 1-6;1.;In;the figure above, at a price of $1, the firm would earn an economic profit of;A);$12.50.;B);$9.;C);$13.50.;D);0.;E);$15.;2.;According;to the figure above, if the market price was $1.50, the individual firm would;A);be;earning a positive economic profit of about $0.87.;B);be;earning a positive economic profit of about $5.;C);be;earning a negative economic profit of about $4.50.;D);be;earning a negative economic profit of about $5.;E);be;earning a positive economic profit of about $0.50.;3.;Refer;to the figure above. Assume that first;there is an increase in demand in the market from D1 to D2. According to the competitive model;discussed in class, in the long run, the typical competitive firm;A);will;produce at quantity 9 and price $1.;B);will;produce at quantity 10 and price $1.50.;C);will;produce at quantity 9 and price $1.50.;D);will;produce at quantity 9 and price $1.25.;E);will;shut down.;4.;According;to the figure above, the shift of the MR curve in the graph on the right side;from MR1 to MR2 is the result of;A);an;increase in demand.;B);a;decrease in demand.;C);more;firms in the industry.;D);fewer;firms in the industry.;E);each existingfirm;becoming more efficient.;5.;According;to the competitive model, the shift of the S curves in the graph on the left;side from S1 to S2 to S3 represents;A);an;increased supply because more firms enter the industry.;B);an;increased supply resulting from a larger number of customers.;C);an;increased supply because each firm produces more.;D);an;increased quantity supplied resulting from a higher demand.;E);an;increased quantity supplied resulting from a higher price.;6.;According;to the figure above, the long-run equilibrium point is not;A);at;the point where ATC = MC.;B);at;a quantity of 10.;C);at;the minimum point of the ATC curve.;D);at;a quantity of 9.;E);at;the point where ATC = MR.;Use;the following to answer questions 7-8;7.;What;is the profit earned by the profit-maximizing firm described in the preceding;figure?;A);AEIG.;B);0AGF.;C);0BKJ.;D);CEIH.;E);ACHG.;8.;Consider;the firm described in the preceding figure. The profit-maximizing output;level and price are, respectively;A);J;and B.;B);F;and E.;C);F;and A.;D);N;and P.;E);L;and D.;Use;the following to answer questions 9-11;Quantity;Total Revenue;Total Cost;15;60;$17;16;64;$19;17;68;$22;18;72;$26;19;76;$31;20;80;$37;9.;Consider;the firm described in the table above. How much profit will the firm make per;period if it is a profit maximizer?;A);$46.;B);Cannot;be determined from the information given.;C);$45.;D);$20.;E);$80.;10.;At the profit maximizing level of output, what is the price of;the product sold by thefirm;described in the table above?;A);Cannot;be determined from the information given.;B);Varies;with output level.;C);$2.;D);$6.;E);$4.;11.;Consider;the firm described in the table above. How many units of the good should the;firm produce to maximize profit?;A);17;units.;B);19;units.;C);16;units.;D);Cannot;be determined from the information given.;E);18;units.;Use;the following to answer questions 12-16;12.;In;the figure above, consumer surplus for the competitive market is;A);the;area P1P2CB.;B);the;area BCE.;C);the;area AP2C.;D);the;area ACF.;E);the;area AP1B.;13.;In;the figure above, consumer surplus in the monopoly situation is;A);the;area BCF.;B);the;area 0FQ1.;C);the;area P1P2CE.;D);the;area AP2C.;E);the;area ACF.;14.;Refer;to the figure above. If the competitive industry is monopolized, then the;area __________ represents the consumer surplus that is transferred to the;monopolist.;A);ABF.;B);P1P2CB.;C);ACEP1.;D);P1P2CE.;E);ACP2.;15.;In;the figure above, producer surplus for the competitive market is;A);the;area 0AB.;B);the;area 0BQ2.;C);0.;D);the;area 0P1B.;E);the;area P1AB.;16.;In;the figure above, what is the resulting deadweight loss if the competitive;industry is monopolized?;A);The;area BCGF.;B);The;area BCE.;C);The;area BCF.;D);The;area P1P2CE.;E);The;area BEF.;Use;the following to answer questions 17-20;Gizmo's Inc.;Quantity;Price;0;$20;1;$18;2;$16;3;$14;4;$12;5;$10;6;$8;7;$6;8;$4;9;$2;10;$0;17.;In;the table above, at what level of output is total revenue maximized?;A);4.;B);5.;C);3.;D);6.;E);7.;18.;According;to the table above, Gizmo's cannot be;A);maximizing;profits.;B);a;competitive firm.;C);an;oligopolistic firm.;D);a;very good idea in the first place.;E);a;monopoly.;19.;According;to the table above, at what level of output is marginal revenue equal to $14?;A);3.;B);1.;C);2.;D);4.;E);5.;20.;According;to the table above, what is the marginal revenue of the third unit?;A);$42.;B);$18.;C);$10.;D);$14.;E);-$2.;Use;the following to answer questions 21-25;21.;Assume;the demand curve intersects the vertical axis at a price of $100. If this were a competitive industry;(assuming that the horizontal sum of the ATC curves of the competitive firms;in the industry is ATC2), in the short run, consumer surplus each;period would be;A);$2,000.;B);$1,925.;C);$3,850.;D);$1,950.;E);Cannot;be determined from the information given.;22.;Assume;the demand curve intersects the vertical axis at $100. How much is consumer surplus at the;profit-maximizing level of output?;A);Cannot be determined from the information given.;B);$1,000.;C);$2,000.;D);$3,900.;E);$50.;23.;In;the preceding figure, assume that a firm with demand curve D and marginal;revenue curve MR has the average total cost curve ATC2. How much will the firm earn in economic;profit each period?;A);$2,100.;B);There is not enough information given to answer the question.;C);$2,000.;D);$800.;E);$1,650.;24.;If;the above figure represented a competitive industry that had an;industry-total ATC curve of ATC1, in the long-run, the price of;the product would be;A);$50.;B);Less;than $30.;C);There;is not enough information given to answer the question.;D);$35.;E);$30.;25.;If;the firm in the preceding figure were a monopoly with ATC curve ATC1;A);In;the long-run the firm would shut down.;B);The;total revenue of the firm would be zero each period.;C);The;accounting profit of the firm would be zero each period.;D);The;economic profit of the firm would be zero each period.;E);None;of the above answers is correct.


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