ECON1010Finalpt2

An increase in the wage rate that a firm pays its workers  _______. 

• does not shift its marginal cost curve but shifts its average total cost curve upwards 

• does not change its marginal cost curve or its average total cost curve   

• shifts both its marginal cost curve and its average total cost curve upward 

• shifts its marginal cost curve upward but not its average total cost curve 

The graph illustrates  Acme, Inc.'s  short-run total cost curves. Choose the statement that is correct.

• Total variable cost and total cost both increase as output increases.

• The vertical gap between curves B and C is equal to total variable cost. 

• As total variable cost  increases, total fixed cost increases but at a slower rate. 

• The total fixed cost curve is curve B.  

Monopolies, oligopolies, and monopolistic competitive industries:  

• all earn positive economic profits in the long run  

• all produce a product that has no substitutes at all D  

• all can charge whatever price they wish to charge  

• all raise both price and quantity above what would occur in perfect competition  

Which of the following goods is both rival and excludable?

• A can of Coca-Cola  

• An uncongested toll road A  

• A fireworks display

• Local police protection

Suppose that a monopolist is maximizing its profits, and the monopolist is also producing a level of output where P > ATC > MC = MR. Then the monopolist:  

• just breaks even.  

• earns positive economic profits.  

• is covering TVC but not TFC.  

• is covering TFC but not TVC.  

• should increase its output. 

Label the following curves 

• 1 = MC, 2= AVC, 3=ATC 

• 1=MC, 2=ATC, 3= AVC 

• 1=TC, 2=ATC, 3=MC 

• 1=MC, 2=TC, 3=ATC 

What does the vertical distance AB measure? 

• ATC

• AFC

• MC

• TVC

The profit-maximizing level of output for a perfectly competitive firm is the output level where  

• TR = MC 

• P = MC 

• P = ATC 

• ATC is at a minimum 

At Sarah’s Bakery, the Average Total Cost of making 20 loaves of bread is $1.00.  The Average Total Cost of making 21 loaves is also $1.00.  The Marginal Cost of the 21st loaf is: 

• $3.10

• $3.00. 

• $2.10.

• $2.00. 

• $1.00 

In which of the following market structures is it possible for firms to make positive economic profits both in the short run and in the long run?  

• Perfect competition  

• Monopolistic competition  

• Oligopoly  

• All of the above