Econ 2010 Quiz 3

Kate can arrange 20 bouquets per day. She is considering

hiring William to work for her. Together Kate and William can arrange 35 bouquets per day. What is William's marginal product?

• 35 bouquets

• 20 bouquets

• 15 bouquets

• 1.75 bouquets

Suppose a firm can produce 300 units of output with 14

workers or 325 units of output per day with 15 workers. If the firm has a diminishing marginal product of labor, which of the following could be it's output with 16 workers?

• 350 units

• 360 units

• 400 units

• 340 units

Bubba is a shrimp fisherman who catches 4,000 pounds of

shrimp per year. He can sell the shrimp for $5 per pound. His average total cost of catching shrimp is $3 per pound. Bubba's annual total profit is _____?

• $4,000

• $8,000

• $20,000

• $12,000

Jane was a partner at a law firm earning $223,000 per year. She left the firm to open her own law practice. In the first year of business she generated revenues of $347,000 and incurred explicit costs of $163,000. What is Jane's accounting profit? What is her economic profit?

• Acct: $184,000; Econ: $39,000

• Acct: $39,000; Econ: $184,000

• Acct: $347,000; Econ: $223,000

• Acct: $223,000; Econ: $163,000

If the firm has a diminishing marginal product of labor, what does that suggest about the shape of the total cost curve?

• increasing linearly

• decreasing linearly

• increasing and getting steeper

• decreasing and getting flatter

Suppose that for a particular firm the only input is labor and that output equals one unit per worker hired. In addition, suppose that marginal cost of the third worker hired is $40, and the average total cost when three workers are hired is $50. What is the total cost of production when three workers are hired?

• $50

• $150

• $10

• $90

Which of the following is true for a competitive firm at it's profit maximizing choice? (Select all that are true)

• MR=MC

• P=AR

• P=MR

• TC=MC

Which of the following is true for a monopoly at it's profit maximizing choice? (Select all that are true)

• MR=MC

• P=AR

• P=MR

• TC=MC

At $25, how much is this competitive firm earning in profits?

• $300

• $5

• $120

• $60

At $25, will firms want to enter, exit, or neither in the long run?

• Enter the market.

• Exit the market.

• Neither