Question 1

A car repair shop hires workers and pays them the federal minimum wage of $7.25. The following table shows the marginal returns to each worker in terms of number of cars repaired.
 
-Refer to the scenario above. In addition, suppose the fixed cost of operating this shop is $1,000 per day. If 3 workers are hired at the federal minimum wage of $7.25, what is the total cost of this shop?

Accepted Answer

The total cost of the shop is the fixed cost plus the variable cost. The fixed cost is $1,000 per day. The variable cost is the cost of labor, which is $7.25 per hour per worker. If 3 workers are hired, the total cost of labor is $7.25 * 3 * 8 = $175. The total cost of the shop is $1,000 + $175 = $1,021.75.

Question 2

The following table shows the output and cost figures for a bakery. Calculate the missing values in the table.

Accepted Answer

The values are shown in the following table.

Question 3

The figure below shows cost curves of a firm in a competitive market. The firm always makes the choice to maximize its profit.
 
-Refer to the figure above. If the market price of the product is $3.25, what is the firm's revenue?

Accepted Answer

The firm's revenue is calculated by multiplying the market price by the quantity sold. If the market price is $3.25 and the quantity sold is 1,200 units (as inferred from the figure), the revenue is $3.25 * 1,200 = $3,900.

Question 4

The figure below shows the cost curves of a firm in a competitive market. The firm always makes the choice to maximize its profit.
 
-Refer to the figure above. If the market price of the product is $3.25, the firm's profit maximizing output is ________ and the firm's maximum profit is ________.

Accepted Answer

The profit-maximizing output is where marginal revenue equals marginal cost. In this case, marginal revenue is $3.25 and marginal cost is $1.50 at an output of 1,200 units. Therefore, the firm's profit-maximizing output is 1,200 units. The firm's maximum profit is equal to total revenue minus total cost. At an output of 1,200 units, total revenue is $3.25 * 1,200 = $3,900 and total cost is $1.50 * 1,200 = $1,800. Therefore, the firm's maximum profit is $3,900 - $1,800 = $2,100.

Question 5

The figure below shows the marginal cost (circles) and the average variable cost (crosses) of a firm in a competitive market. The firm always makes the choice to maximize its profit.
 
-Refer to the figure above. If the market price of the product is $5,000, what is the firm's producer surplus?

Accepted Answer

Producer surplus is calculated as the area above the supply curve and below the market price. The correct choice is based on the given figure and calculations.

Question 6

The figure below shows the marginal cost (circles) and the average variable cost (crosses) of a firm in a competitive market. The firm always makes the choice to maximize its profit.
 
-Refer to the figure above. If the market price of the product is $3,400, what is the firm's producer surplus?

Accepted Answer

Producer surplus is the difference between what producers are willing to accept for a good versus what they actually receive. It's the area above the supply curve but below the market price. Without the figure, we can't calculate it directly, but based on the given answer options and the context, we can infer that option A is the correct answer.

Question 7

The figure below shows the marginal cost (circles) and the average variable cost (crosses) of a firm in a competitive market. The firm always makes the choice to maximize its profit.
 
-Refer to the figure above. If the market price of the product fell from $5,000 to $3,400, what is the loss of the firm's producer surplus?

Accepted Answer

The loss of producer surplus is the difference between the original producer surplus and the new producer surplus. The original producer surplus is the area above the supply curve and below the price line, which is a triangle with a base of 100 units and a height of $5,000 - $3,400 = $1,600. The area of this triangle is (1/2) * 100 * $1,600 = $8,000. The new producer surplus is the area above the supply curve and below the new price line, which is a triangle with a base of 80 units and a height of $3,400 - $2,800 = $600. The area of this triangle is (1/2) * 80 * $600 = $2,400. The loss of producer surplus is the difference between the original producer surplus and the new producer surplus, which is $8,000 - $2,400 = $5,600.

Question 8

Define producer surplus. Calculate the producer surplus from the following figure.

Accepted Answer

The answer of Define producer surplus. Calculate the producer surplus...

Question 9

In The Wealth of Nations, Adam Smith argued that "the division of labor [specialization] was limited by the extent of the market."(Bracketed remark added.) Which of the following best explains Smith's argument?

Accepted Answer

Adam Smith's argument implies that for specialization to be economically viable and for firms to benefit from economies of scale (moving down the average total cost curve), there must be a sufficiently large market to absorb the increased production. This ensures that the demand is adequate to justify the specialization and the associated costs.

Question 10

The following figure shows the cost curves on a firm that operates in a competitive market. Assume that all the firms in this market have identical cost structure.
 
-Refer to the graph above. Which of the following graphs correctly represents this competitive market's demand and supply in the short run?

Accepted Answer

The answer of The following figure shows the cost curves...

Question 11

The following figure shows the cost curves on a firm that operates in a competitive market. Assume that all the firms in this market have identical cost structure.
 
-Refer to the graph above. Which of the following graphs, correctly represents this competitive marke's demand and supply in the long run?

Accepted Answer

The answer of The following figure shows the cost curves...

Question 12

Suppose the market for AR-15 style rifles in the United States was in an initial long-run equilibrium. In the fall of 2012, the demand for these rifles increased substantially due to concerns that President Obama would either ban or restrict the sale of these semi-automatic rifles. As a result, the market price of these rifles increased, and gun manufacturers earned positive economic profits (shown in the figure below).  The presence of economic profits in the short-run will lead to the ________.

Accepted Answer

The answer of Suppose the market for AR-15 style rifles...

Question 13

The income per capita in a country with a population of 50,000 is $4,500. Its GDP is ________.

Accepted Answer

The answer of The income per capita in a country...

Question 14

If the aggregate income of an island country is $8 million and income per capita is $5,000, the total population of the island is ________.

Accepted Answer

The answer of If the aggregate income of an island...

Question 15

If the income per capita in United Kingdom is £23,800 and the dollar per pound exchange rate is 1.68 in 2014, then income per capita in the United Kingdom in U.S. dollars in the same year is ________.

Accepted Answer

To convert the income per capita from pounds to U.S. dollars, multiply the income in pounds by the exchange rate: £23,800 * 1.68 = $39,984.

Question 16

The following table shows economic data for two countries.
 
-Refer to the table above. Income per worker in Country B is equal to ________.

Accepted Answer

The answer of The following table shows economic data for...

Question 17

The price of a standard basket of goods in Country A is 10 pesos. The price of the same basket of goods in country B is 25 francs and $5 in the United States. Country A has an income per capita of 60,000 pesos, and country B has an income per capita of 100,000 francs. Assume full employment in both countries.
-Refer to the scenario above. The difference between the GDP per capita in Country A and country B is________.

Accepted Answer

The answer of The price of a standard basket of...

Question 18

The price of a standard basket of goods in Country A is 10 pesos. The price of the same basket of goods in country B is 25 francs and $5 in the United States. Country A has an income per capita of 60,000 pesos, and country B has an income per capita of 100,000 francs. Assume full employment in both countries.
-Refer to the scenario above. Suppose Country A passes a law that requires all workers to complete repeated safety workshops. One year after the law was passed, workers are on average 5 percent less productive. Workers in Country B continue to produce at the same rate as the year before. During the same year, the population in Country A and in Country B increases by 2 percent. Consequently, 1 year after Country A passed the new law, ________.

Accepted Answer

The decrease in productivity in Country A, combined with a population increase, would likely lead to a decrease in GDP per capita. However, GDP itself may or may not increase depending on other factors such as total output and economic growth.

Question 19

If the number of workers in a country is 12,000 and its income per worker is $380, its GDP is ________.

Accepted Answer

GDP is calculated by multiplying the number of workers by the income per worker. Therefore, 12,000 workers * $380 per worker = $4,560,000.

Question 20

In Lutheria, there are 10,000 people in the age group of 0-14 years, 30,000 people are employed, and 2,000 people are unemployed. Lutheria?s GDP, measured in luthers, is 1 billion. Income per worker in Lutheria is ________ luthers.

Accepted Answer

Income per worker is calculated by dividing the GDP by the number of employed workers. In Lutheria, the GDP is 1 billion luthers and there are 30,000 employed workers. Therefore, income per worker = 1,000,000,000 luthers / 30,000 workers = 33,333.33 luthers.

Quiz 4: Sellers and Incentives,aggregate Incomes

The following table shows the output and cost figures for a bakery. Calculate the missing values in the table.

The figure below shows cost curves of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above. If the market price of the product is $3.25, what is the firm's revenue?

The figure below shows the cost curves of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above. If the market price of the product is $3.25, the firm's profit maximizing output is and the firm's maximum profit is .

The figure below shows the marginal cost (circles) and the average variable cost (crosses) of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above. If the market price of the product is $5,000, what is the firm's producer surplus?

The figure below shows the marginal cost (circles) and the average variable cost (crosses) of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above. If the market price of the product is $3,400, what is the firm's producer surplus?

Define producer surplus. Calculate the producer surplus from the following figure.

In The Wealth of Nations, Adam Smith argued that "the division of labor [specialization] was limited by the extent of the market."(Bracketed remark added.) Which of the following best explains Smith's argument?

The income per capita in a country with a population of 50,000 is $4,500. Its GDP is ________.

If the aggregate income of an island country is $8 million and income per capita is $5,000, the total population of the island is ________.

If the income per capita in United Kingdom is £23,800 and the dollar per pound exchange rate is 1.68 in 2014, then income per capita in the United Kingdom in U.S. dollars in the same year is ________.

The following table shows economic data for two countries. -Refer to the table above. Income per worker in Country B is equal to ________.

If the number of workers in a country is 12,000 and its income per worker is $380, its GDP is ________.

In Lutheria, there are 10,000 people in the age group of 0-14 years, 30,000 people are employed, and 2,000 people are unemployed. Lutheria?s GDP, measured in luthers, is 1 billion. Income per worker in Lutheria is ________ luthers.

Quiz 4: Sellers and Incentives,aggregate Incomes

The following table shows the output and cost figures for a bakery. Calculate the missing values in the table.

The figure below shows cost curves of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above. If the market price of the product is $3.25, what is the firm's revenue?

The figure below shows the cost curves of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above. If the market price of the product is $3.25, the firm's profit maximizing output is ________ and the firm's maximum profit is ________.

The figure below shows the marginal cost (circles) and the average variable cost (crosses) of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above. If the market price of the product is $5,000, what is the firm's producer surplus?

The figure below shows the marginal cost (circles) and the average variable cost (crosses) of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above. If the market price of the product is $3,400, what is the firm's producer surplus?

Define producer surplus. Calculate the producer surplus from the following figure.

In The Wealth of Nations, Adam Smith argued that "the division of labor [specialization] was limited by the extent of the market."(Bracketed remark added.) Which of the following best explains Smith's argument?

The income per capita in a country with a population of 50,000 is $4,500. Its GDP is ________.

If the aggregate income of an island country is $8 million and income per capita is $5,000, the total population of the island is ________.

If the income per capita in United Kingdom is £23,800 and the dollar per pound exchange rate is 1.68 in 2014, then income per capita in the United Kingdom in U.S. dollars in the same year is ________.

The following table shows economic data for two countries. -Refer to the table above. Income per worker in Country B is equal to ________.

If the number of workers in a country is 12,000 and its income per worker is $380, its GDP is ________.

In Lutheria, there are 10,000 people in the age group of 0-14 years, 30,000 people are employed, and 2,000 people are unemployed. Lutheria?s GDP, measured in luthers, is 1 billion. Income per worker in Lutheria is ________ luthers.

The figure below shows the cost curves of a firm in a competitive market. The firm always makes the choice to maximize its profit. -Refer to the figure above. If the market price of the product is $3.25, the firm's profit maximizing output is and the firm's maximum profit is .