Microeconomics Practice calculations - final

In April 2024, a firm’s total revenue was $10,000. The expenses made by the firm were the following: $3,000 in monthly rent for office space, $300 in monthly rent for equipment, $4,000 to workers in wages for the month, and $2,000 for the supplies the firm used. If you determine the firm’s economic profit in April 2024 is −$200, then it must be true that:

• firm’s implicit costs were $0 per month

• firm’s implicit costs were $800 per month

• firm’s implicit costs were $900 per month

• Firm’s implicit costs were $1500 per month.

Suppose a firm's total revenue is $2000 when it sells 200 units, $2100 when it sells 210 units, and $1200 when it sells 220 units. The firm, therefore, is a(n)

• monopolist

• oligopolist

• monopolistic competitor

• perfect competitor

What is the maximum profit that the monopolist can earn? a. $10 b. $20 c. $30 d. $40

• $10

• $20

• $30

• $40

When the firm produces 120 units of output, its AVC = $6, and AFC = $4. What is firm’s total cost?

• $1,200

• $480

• $720

• $960

When a firm produces 500 units of output, its total variable cost is $3,000, and total fixed cost is $600. The firm sells each unit of output for $10. If the price drops to $8 per unit, should the firm continue to operate in the short run?

• No, because price is less than average total cost

• Yes, because price is less than average total cost

• No, because price is not greater than average total cost

• Yes, because price is greater than average variable cost

In a competitive market the price is $28. A typical firm in the market has ATC = $25, AVC = $18, and AFC = $7. How much economic profit is the firm earning in the short run?

• $7 per unit

• $3 per unit

• $10 per unit

• $11 per unit

A monopoly firm maximizes its profit by producing Q = 700 units of output. At that level of output, its marginal revenue is $50, its average revenue is $80, and its average total cost is $40. What is the total profit?

• $35,000

• $28,000

• $7,000

• $56,000

Suppose a firm in a perfectly competitive market produces and sells 50 units of output and earns $500 in total revenue. If the firm increases its output to 60 units, the average revenue of the 150th unit will be

• $10

• $25

• $12

• $15

Last year you worked as a consultant. You hired an assistant for $24,000 annually and rented office space for $1,000 per month. Your total revenue for the year was $130,000. So, last year, your accounting profit was

• $118,000

• $105,000

• $94,000

• $156,000