Deck 22: A: Industry Supply

Question 1

Suppose that the garden gnome industry was in long-run equilibrium given the circumstances described in Problem 1. Suppose, as in Problem 2, that it was discovered to everyone's surprise on January 1, 1993, after it was too late to change orders for gnome molds, that the cost of the plaster and labor needed to make a gnome had changed to $8. If the demand curve does not change, what will happen to the equilibrium price of gnomes?

A) Rises by $1.
B) Falls by $1.
C) Stays constant.
D) Rises by $8.
E) Falls by $4.

Answer 1

C

Question 2

In Problem 1, if the cost of plaster and labor were $5 per gnome and everything else is as in the problem (gnome molds cost $1,000, interest rate is 10%), what is the lowest price of gnomes at which there would be a positive supply in the long run?

A) $5.50
B) $7.20
C) $5
D) $10
E) $6

Answer 2

B

Question 3

Suppose that the cost of capturing a cockatoo and transporting him to the United States is about $40 per bird. Cockatoos are drugged and smuggled in suitcases to the United States. Half of the smuggled cockatoos die in transit. Each smuggled cockatoo has a 10% probability of being discovered, in which case the smuggler is fined. If the fine imposed for each smuggled cockatoo is increased to $1,100, then the equilibrium price of cockatoos in the United States will be

A) $150.
B) $95.
C) $73.
D) $333.33.
E) $244.44.

Answer 3

D

Question 4

Suppose that the cost of capturing a cockatoo and transporting him to the United States is about $40 per bird. Cockatoos are drugged and smuggled in suitcases to the United States. Half of the smuggled cockatoos die in transit. Each smuggled cockatoo has a 10% probability of being discovered, in which case the smuggler is fined. If the fine imposed for each smuggled cockatoo is increased to $700, then the equilibrium price of cockatoos in the United States will be

A) $61.
B) $244.44.
C) $75.
D) $110.
E) $155.56.

Question 5

Suppose that the cost of capturing a cockatoo and transporting him to the United States is about $40 per bird. Cockatoos are drugged and smuggled in suitcases to the United States. Half of the smuggled cockatoos die in transit. Each smuggled cockatoo has a 10% probability of being discovered, in which case the smuggler is fined. If the fine imposed for each smuggled cockatoo is increased to $1,000, then the equilibrium price of cockatoos in the United States will be

A) $311.11.
B) $140.
C) $90.
D) $70.
E) $222.22.

Question 6

In Problem 1, if the cost of plaster and labor were $13 per gnome and everything else is as in the problem (gnome molds cost $1,000, interest rate is 10%), what is the lowest price of gnomes at which there would be a positive supply in the long run?

A) $14.30
B) $26
C) $15.20
D) $13
E) $15.60

Question 7

Suppose that the garden gnome industry was in long-run equilibrium given the circumstances described in Problem 1. Suppose, as in Problem 2, that it was discovered to everyone's surprise on January 1, 1993, after it was too late to change orders for gnome molds, that the cost of the plaster and labor needed to make a gnome had changed to $6. If the demand curve does not change, what will happen to the equilibrium price of gnomes?

A) Falls by $1.
B) Rises by $6.
C) Stays constant.
D) Rises by $1.
E) Falls by $3.

Question 8

In Problem 1, if the cost of plaster and labor were $11 per gnome and everything else is as in the problem (gnome molds cost $1,000, interest rate is 10%), what is the lowest price of gnomes at which there would be a positive supply in the long run?

A) $11
B) $22
C) $13.20
D) $12.10
E) $13.20

Question 9

In Problem 1, if the cost of plaster and labor were $10 per gnome and everything else is as in the problem (gnome molds cost $1,000, interest rate is 10%), what is the lowest price of gnomes at which there would be a positive supply in the long run?

A) $10
B) $11
C) $20
D) $12.20
E) $12

Question 10

Suppose that the garden gnome industry was in long-run equilibrium as described in Problem 1. On January 1, 1993, the cost of plaster and labor remained at $7 per gnome, gnome molds still cost $1,000, and the interest rate remained at 10%, but the government introduced a tax of $4 on every garden gnome sold. Then the equilibrium price of garden gnomes in 1993 would be

A) $13.
B) $4.
C) $9.20.
D) $11.
E) $15.

Question 11

Suppose that the garden gnome industry was in long-run equilibrium given the circumstances described in Problem 1. Suppose, as in Problem 2, that it was discovered to everyone's surprise on January 1, 1993, after it was too late to change orders for gnome molds, that the cost of the plaster and labor needed to make a gnome had changed to $9. If the demand curve does not change, what will happen to the equilibrium price of gnomes?

A) Stays constant.
B) Rises by $2.
C) Falls by $2.
D) Rises by $9.
E) Falls by $4.50.

Question 12

Suppose that the cost of capturing a cockatoo and transporting him to the United States is about $40 per bird. Cockatoos are drugged and smuggled in suitcases to the United States. Half of the smuggled cockatoos die in transit. Each smuggled cockatoo has a 10% probability of being discovered, in which case the smuggler is fined. If the fine imposed for each smuggled cockatoo is increased to $900, then the equilibrium price of cockatoos in the United States will be

A) $130.
B) $85.
C) $288.89.
D) $67.
E) $200.

Question 13

Suppose that the garden gnome industry was in long-run equilibrium as described in Problem 1. On January 1, 1993, the cost of plaster and labor remained at $7 per gnome, gnome molds still cost $1,000, and the interest rate remained at 10%, but the government introduced a tax of $4 on every garden gnome sold. Then the equilibrium price of garden gnomes in 1993 would be

A) $11.
B) $9.20.
C) $13.
D) $4.
E) $15.

Question 14

Suppose that the garden gnome industry was in long-run equilibrium given the circumstances described in Problem 1. Suppose, as in Problem 2, that it was discovered to everyone's surprise on January 1, 1993, after it was too late to change orders for gnome molds, that the cost of the plaster and labor needed to make a gnome had changed to $6. If the demand curve does not change, what will happen to the equilibrium price of gnomes?

A) Stays constant.
B) Falls by $1.
C) Rises by $6.
D) Rises by $1.
E) Falls by $3.

Question 15

Suppose that the garden gnome industry was in long-run equilibrium given the circumstances described in Problem 1. Suppose, as in Problem 2, that it was discovered to everyone's surprise on January 1, 1993, after it was too late to change orders for gnome molds, that the cost of the plaster and labor needed to make a gnome had changed to $6. If the demand curve does not change, what will happen to the equilibrium price of gnomes?

A) Rises by $6.
B) Rises by $1.
C) Stays constant.
D) Falls by $1.
E) Falls by $3.

Question 16

Suppose that the garden gnome industry was in long-run equilibrium as described in Problem 1. On January 1, 1993, the cost of plaster and labor remained at $7 per gnome, gnome molds still cost $1,000, and the interest rate remained at 10%, but the government introduced a tax of $7 on every garden gnome sold. Then the equilibrium price of garden gnomes in 1993 would be

A) $16.
B) $9.20.
C) $7.
D) $14.
E) $21.

Question 17

In Problem 1, if the cost of plaster and labor were $5 per gnome and everything else is as in the problem (gnome molds cost $1,000, interest rate is 10%), what is the lowest price of gnomes at which there would be a positive supply in the long run?

A) $5
B) $10
C) $7.20
D) $5.50
E) $6

Question 18

Suppose that the garden gnome industry was in long-run equilibrium as described in Problem 1. On January 1, 1993, the cost of plaster and labor remained at $7 per gnome, gnome molds still cost $1,000, and the interest rate remained at 10%, but the government introduced a tax of $9 on every garden gnome sold. Then the equilibrium price of garden gnomes in 1993 would be

A) $16.
B) $9.
C) $18.
D) $9.20.
E) $25.

Question 19

Suppose that the garden gnome industry was in long-run equilibrium as described in Problem 1. On January 1, 1993, the cost of plaster and labor remained at $7 per gnome, gnome molds still cost $1,000, and the interest rate remained at 10%, but the government introduced a tax of $8 on every garden gnome sold. Then the equilibrium price of garden gnomes in 1993 would be

A) $17.
B) $8.
C) $9.20.
D) $15.
E) $23.

Question 20

Suppose that the cost of capturing a cockatoo and transporting him to the United States is about $40 per bird. Cockatoos are drugged and smuggled in suitcases to the United States. Half of the smuggled cockatoos die in transit. Each smuggled cockatoo has a 10% probability of being discovered, in which case the smuggler is fined. If the fine imposed for each smuggled cockatoo is increased to $1,000, then the equilibrium price of cockatoos in the United States will be

A) $140.
B) $90.
C) $70.
D) $311.11.
E) $222.22.

Question 21

In Problem 4, suppose that each firm has the cost function c(y) = y² + 9 for y > 0 and c(0) = 0. With industry demand given by D(p) = 51 - p, the equilibrium price and equilibrium number of firms in the industry (in that order) will be

A) $8 and 11.
B) $3 and 18.
C) $3 and 48.
D) $6 and 15.
E) $6 and 45.

Question 22

In Problem 13, in the absence of government interference, there is a constant marginal cost of $5 per ounce for growing marijuana and delivering it to buyers. If the probability that any shipment of marijuana seized is .30 and the fine if a shipper caught is $50 per ounce, then the equilibrium price of marijuana per ounce is

A) $28.57.
B) $20.
C) $55.
D) $3.50.
E) $6.50.

Question 23

In Problem 8, the supply curve of any firm is S_i(p) = . If a firm produces 2 units of output, what are its total variable costs?

A) $8
B) $6
C) $2
D) $4
E) There is not enough information given to determine total variable costs.

Question 24

In Problem 13, in the absence of government interference, there is a constant marginal cost of $5 per ounce for growing marijuana and delivering it to buyers. If the probability that any shipment of marijuana seized is .50 and the fine if a shipper caught is $40 per ounce, then the equilibrium price of marijuana per ounce is

A) $50.
B) $2.50.
C) $25.
D) $45.
E) $7.50.

Question 25

In Problem 13, in the absence of government interference, there is a constant marginal cost of $5 per ounce for growing marijuana and delivering it to buyers. If the probability that any shipment of marijuana seized is .50 and the fine if a shipper caught is $40 per ounce, then the equilibrium price of marijuana per ounce is

A) $50.
B) $45.
C) $2.50.
D) $25.
E) $7.50.

Question 26

In Problem 13, in the absence of government interference, there is a constant marginal cost of $5 per ounce for growing marijuana and delivering it to buyers. If the probability that any shipment of marijuana seized is .10 and the fine if a shipper caught is $20 per ounce, then the equilibrium price of marijuana per ounce is

A) $25.
B) $4.50.
C) $7.78.
D) $7.
E) $5.50.

Question 27

In Problem 8, if market demand is equal to D(p) = 20 - 3p, the equilibrium price and number of firms operating in the market are (in that order)

A) $3.08 and 7
B) $3.00 and 6
C) $3.00 and 8
D) $3.14 and 3
E) $3.33 and 5

Question 28

In Problem 8, the supply curve of any firm is S_i(p) = . If a firm produces 5 units of output, what are its total variable costs?

A) $37.50
B) $25
C) $50
D) $23
E) There is not enough information given to determine total variable costs.

Question 29

In Problem 8, the supply curve of any firm is S_i(p) = . If a firm produces 6 units of output, what are its total variable costs?

A) $72
B) $34
C) $54
D) $36
E) There is not enough information given to determine total variable costs.

Question 30

In Problem 8, the supply curve of any firm is S_i(p) = . If a firm produces 4 units of output, what are its total variable costs?

A) $16
B) $14
C) $24
D) $32
E) There is not enough information given to determine total variable costs.

Question 31

In Problem 13, in the absence of government interference, there is a constant marginal cost of $5 per ounce for growing marijuana and delivering it to buyers. If the probability that any shipment of marijuana seized is .20 and the fine if a shipper caught is $45 per ounce, then the equilibrium price of marijuana per ounce is

A) $50.
B) $17.50.
C) $4.
D) $14.
E) $6.

Question 32

In Problem 9, if the demand curve for pollicles is negatively sloped and the government imposes a tax t on every unit of output sold by the industry, in the long run

A) fewer pollicles will be sold.
B) more pollicles will be sold.
C) each firm in the industry produces more pollicles.
D) each firm in the industry produces fewer pollicles.
E) the same number of pollicles will be sold.

Question 33

In Problem 8, the supply curve of any firm is S_i(p) = . If a firm produces 3 units of output, what are its total variable costs?

A) $9
B) $13.50
C) $7
D) $18
E) There is not enough information given to determine total variable costs.