Question 1

-Refer to the information above.If the output price is 50 cents and rent decreases from $75 to $50,the price taker will

Accepted Answer

The rent is a fixed cost and does not affect the marginal cost, which is based on variable costs. Therefore, the output remains unchanged.

Question 2

Assume that a price taker uses 13 employee-hours and an office to produce 100 units of output.The price of output is $5,the wage rate is $10,and rent is $200.The firm will collect _____ in total revenue.

Accepted Answer

The firm produces 100 units of output, and the price per unit is $5. Therefore, total revenue is 100 units * $5/unit = $500.

Question 3

Suppose a price taker is collecting $1,999 in total revenue and the total cost of its fixed factors of production decreases from $500 to $400.One can speculate that the firm will

Accepted Answer

With the decrease in the cost of fixed factors of production, the firm's total cost will decrease, thereby increasing its profit or decreasing its loss. As the firm is a price taker, it cannot increase its price. It may choose to increase its output, but this cannot be determined solely based on the given information. Therefore, the best choice is that the firm will earn a higher profit or a smaller loss.

Question 4

Assume that a price taker uses 13 employee-hours and an office to produce 100 units of output.The price of output is $5,the wage rate is $10,and rent is $200.The firm has total cost of

Accepted Answer

Total labor cost = wage rate * employee hours = $10 * 13 = $130
Total fixed cost = rent = $200
Total cost = labor cost + fixed cost = $130 + $200 = $330
Therefore, the best choice is B.

Question 5

-Refer to the information above.If rent decreases from $75 to $50,the marginal cost of increasing output from 45 units to 90 units

Accepted Answer

The marginal cost is not affected by changes in fixed costs like rent. It remains constant at 31 cents.

Question 6

If a price-taking firm is experiencing diminishing marginal returns to its variable factors of production,as the output price falls,it will

Accepted Answer

If a price-taking firm is experiencing diminishing marginal returns to its variable factors of production, it means that as it produces more, the cost of producing additional units of output increases. This leads to lower profits or even losses as the output price falls. Therefore, the firm would produce less to avoid further losses.

Question 7

-Refer to the information above.If the wage rate falls from $7 to $6,the marginal cost of increasing output from 45 units to 90 units

Accepted Answer

The answer of 
-Refer to the information above.If the wage...

Question 8

-Refer to the information above.The marginal cost of increasing output from 135 units to 180 units is

Accepted Answer

The marginal cost is calculated by dividing the change in total cost by the change in quantity. Without specific cost data, the correct choice is based on the given options.

Question 9

-Refer to the information above.If the output price for its good is 80 cents,this price taker should produce

Accepted Answer

The price-taking firm should produce where marginal cost equals price. At an output of 225 units, marginal cost is 80 cents, which is equal to the output price. Therefore, the firm should produce more than 225 units.

Question 10

Assume that a price taker uses 13 employee-hours and an office to produce 100 units of output.The price of output is $5,the wage rate is $10,and rent is $200.The firm has total labour costs of

Accepted Answer

The answer of Assume that a price taker uses 13...

Question 11

-Refer to the information above.As the law of diminishing marginal returns becomes more evident,marginal cost

Accepted Answer

As the law of diminishing marginal returns sets in, additional units of input contribute less to output, causing marginal cost to rise.

Question 12

-Refer to the information above.If the wage rate rises from $7 to $8,the marginal cost of increasing output from 135 units to 180 units

Accepted Answer

The answer of 
-Refer to the information above.If the wage...

Question 13

-Refer to the information above.The marginal cost of increasing output from 45 units to 90 units is

Accepted Answer

The answer of 
-Refer to the information above.The marginal cost...

Question 14

Suppose a price taker knows that it is not going to shut down but it is going to earn a loss.It should pick the output level where

Accepted Answer

If the price taker knows it is going to earn a loss, it should aim to minimize the loss by producing at the level where price equals marginal cost. This is because producing any output level where price is lower than marginal cost will result in an even greater loss. Choosing the output level where total cost is minimized, total revenue is maximized, or the cost of variable factors is minimized may not necessarily minimize the loss in this scenario.

Question 15

If a price-taking firm is experiencing diminishing marginal returns to its variable factors of production,as the output price rises,it will

Accepted Answer

As the output price rises, a price-taking firm will produce more to maximize profits, even if it is experiencing diminishing marginal returns.

Question 16

-Refer to the information above.If the output price is 50 cents and rent increases from $75 to $100,the price taker will

Accepted Answer

The rent is a fixed cost and does not affect the marginal cost. Therefore, the output remains unchanged as marginal cost is unchanged.

Question 17

-Refer to the information above.If the output price for its good is 50 cents,this price taker should produce

Accepted Answer

The answer of 
-Refer to the information above.If the output...

Question 18

-Refer to the information above.If the output price for its good is 25 cents,this price taker should produce

Accepted Answer

A price taker should produce where marginal cost equals the market price. If the output price is 25 cents, the firm should produce more than 45 units but less than 90 units to maximize profit or minimize loss, assuming the marginal cost curve intersects the price line within this range.

Question 19

-Refer to the information above.If rent increases from $75 to $100,the marginal cost of increasing output from 135 units to 180 units

Accepted Answer

The marginal cost of increasing output from 135 units to 180 units is the change in total cost divided by the change in output. The change in total cost is $100 - $75 = $25. The change in output is 180 units - 135 units = 45 units. Therefore, the marginal cost is $25 / 45 units = 62 cents.

Question 20

-Refer to the information above.The labour cost of 135 units of output is

Accepted Answer

The answer of 
-Refer to the information above.The labour cost...

Quiz 5: Perfectly Competitive Supply: the Cost Side of the Market