Economics Homework
Format MLA
Volume of 2 pages (550 words)
Assignment type : Coursework
Description
answer the questions of the homework
Multiple Choice (2 points each)
____ 1. Which of the following is not an assumption of the theory of perfect competition?
a. There are many sellers and many buyers, none of which is large in relation to total sales or
purchases.
b. Each firm produces and sells a differentiated product.
c. Buyers and sellers have all relevant information with respect to prices, product quality,
and sources of supply.
d. There is easy entry and exit.
____ 2. The demand curve for a perfectly competitive firm
a. is downward sloping.
b. is upward sloping.
c. is perfectly horizontal.
d. is perfectly vertical.
e. may be downward or upward sloping, depending upon the type of product offered for sale.
____ 3. Consider the following data for a perfectly competitive firm: equilibrium price = $9, quantity of output
produced = 1,000 units, average total cost = $7, and average variable cost $5. Given this, total revenue is
__________, total cost is __________, and total fixed cost is __________.
a. $6,000; $8,000; $1,000
b. $9,000; $7,000; $5,000
c. $10,000; $8,000; $3,000
d. $9,000; $7,000; $2,000
e. none of the above
____ 4. The perfectly competitive firm’s short-run supply curve is the
a. upward-sloping portion of its average total cost curve.
b. horizontal portion of its marginal revenue curve.
c. portion of its average variable cost curve that lies above the average fixed cost curve.
d. upward-sloping portion of its marginal cost curve.
e. portion of its marginal cost curve that lies above its average variable cost curve.
____ 5. Why must profits be zero in long-run competitive equilibrium?
a. If profits are not zero, firms will enter or exit the industry.
b. If profits are not zero, firms will produce higher-quality goods.
c. If profits are not zero, marginal revenue will rise.
d. If profits are not zero, marginal cost will rise.
____ 6. If an industry is in long-run competitive equilibrium and experiences a decrease in demand, then as a result
the equilibrium price will __________, which will cause the representative firm’s __________ curve to shift
downward and some firms will __________ the industry.
a. rise; marginal cost; enter
b. fall; marginal cost; enter
c. rise; marginal revenue; enter
d. fall; demand; exit
e. fall; marginal cost; exit
EC2010B Problem Set 4
____ 7. There are 200 firms in a perfectly competitive industry. Half of the firms supply 100 units at $3 per unit and
the other half of the firms supply 130 units at $3 per unit. One point on the market supply curve is
a. 23,000 units at $3.
b. 10,000 units at $3.
c. 13,000 units at $3.
d. 23,000 units at $6.
e. none of the above
Exhibit 1
____ 8. Refer to Exhibit 1. The profit-maximizing single-price monopolist will produce which quantity of output?
a. Q2
b. Q1
c. Q3
d. Q4
e. none of the above
____ 9. Refer to Exhibit 1. The deadweight loss triangle is what area?
a. GFC
b. HGD
c. GCD
d. DCE
e. BFG
____ 10. Refer to Exhibit 1. The profit-maximizing single-price monopolist earns total revenue equal to what area?
a. 0BCQ1
b. 0ADQ1
c. DCE
d. ABCD
e. GFC
EC2010B Problem Set 4
True/False (2 points each)
Mark each statement as True or False. If False, briefly explain why the statement is false.
____ 1. If the firm is producing a quantity of output for which MC > MR, then the firm should increase production
to increase its profits.
____ 2. In long-run competitive equilibrium, no firm has an incentive to change its plant size.
____ 3. For the perfectly competitive firm, the demand curve and the marginal revenue curve are one and the same.
____ 4. When a firm produces the quantity of output where price equals marginal cost, it has achieved resource
allocative efficiency.
____ 5. The monopolist’s demand curve is perfectly inelastic.
EC2010B Problem Set 4
Free Response (5 points each)
1. Why is profit maximized at the level of output where marginal revenue equals marginal cost?
2. In the short run, if price (P) is less than average total cost (ATC), will a perfectly competitive firm
necessarily shut down? Explain why or why not using a hypothetical example.
EC2010B Problem Set 4
3. What is the role of profits in increasing economic efficiency?
4. Suppose a single-price monopoly firm faces
the following Demand, Marginal Revenue,
and Marginal Cost curves.
Which quantity will this profit-maximizing
monopolist produce, and what price will they
charge for their product?
How much profit will they earn?
EC2010B Problem Set 4
Extra credit: Referring to the Freakonomics podcast episode “Thinking is Expensive” (link posted on
Blackboard), what concerns have arisen about monopolies as the economy has entered the
Information Age?
I have been affected severally with late delivery of assignment but since I hired an EssayBark writer, my assignment reaches me before the expiry of the agreed deadline. Some tasks proved to be difficult since they required me to express my original ideas after carrying out an extensive research. This used to give me sleepless nights and occasionally used to turn down my friends invites to parties. However, EssayBark.com came at a time I needed them most and their services proved to be of high quality.
If it were not for EssayBark.com, I don't think I would be where I am today. 90 percent of my success came from this company and I can say without any fear of contradiction that they are the best essay writing company in the whole world.
Nothing seemed to work my way until I hired EssayBark.com. I can now confidently say that I enjoy my Environmental Science Course because the ideas provided by the writers have simplified all the technicalities of the subject. It seems that your writer understood the subject well. I believe she has a doctorate in the subject. Thanks to all of them for treating me personally.
Johannesburg, South Africa
Since I started hiring EssayBark.com I learned that investing in your future is more important than any monetary investment. The knowledge provided in my political science essays by your writers helped me defend my thesis professionally in front of my teachers. I am highly obliged to your writers.
I sometimes lack words to describe how happy I am since I met you guys. You are a gift to many as the essays provided by your writers are original, accurate, and timely.
Meeting EssayBark.com, to me is fate. I had never dreamt of getting an A in my English literature course but you made my dream come true. Thank you so much.
Since I started working with Essaybark.com life has never been the same again. I can comfortably say that my grades have greatly improved and I no longer have to worry about failing.
My experience with Essaybark.com was one of a kind. They completely erased all my worries and as per now, I feel like am a master of all difficult topics which used to give me sleepless nights. Thanks a lot for opening my eyes.
When I decided to join MBA, I wasn’t sure how I was going to handle those essays which required creative writing skills because I was literary very poor in it. However, my problem was solved by Essaybark.com. Apart from helping me with my assignments, they gave me free advice on how to polish my writing skills. My future is now bright all thanks to Essaybark.com.
My worry with most companies offering writing services had been originality but since I started engaging Essaybark.com, all I get is quality and original work, delivered within the specified time frame. If you are looking for quality and non-plagiarized work, I recommend this site for you.
[wpadm-chat]
