Following Cost Data for a firm that is selling in a perfectly competitive market.

Question. If the market price for the firm’s product is $30, the perfectly competitive firm will:

A. Produce 7 units at a loss of $109.
B. Produce 8 units at an economic profit of $30.00.
C. Produce 8 units and 'break even' (economic profit = 0).
D. Produce zero units at a loss of $100.

Question. If the market price for the firm's product is $14, the perfectly competitive firm will:

A. Produce that quantity where P = MC = minimum AVC and should shut down.
B. Produce that quantity where P < MC, making a negative economic profit.
C. Produce at a quantity where P > ATC, making a positive economic profit.
D. Produce where P= MC = minimum ATC, making zero economic profit.

Question. The firm's supply curve given the data above:

A. Is the entire MC curve.
B. Is the MC curve after a quantity of 4.
C. Is the MC curve after a quantity of 6.
D. Is the AVC curve after a quantity of 6

Question. The figure below represents Tony's Pizza Parlor, a firm in monopolistic competition.

A. What quantity will be produced?
B. What price will be charged?
C. What is Tony's total cost?
D. What is Tony's total revenue?
E. What is Tony's economic profit or loss?
F. Is this a long-run equilibrium? Why or why not?

Question. Two firms are introducing an improved version of their toothpastes. They must decide whether or not to advertise their products. The table below gives the payoff matrix in terms of the economic profits they expect in each case. The payoffs are in terms of millions of dollars.

A. What is outcome for a non-cooperative non-repeating game?
B. If they could cooperate, what strategy would they prefer? What would be the payoff?

Answer Following Two Questions:
Suppose Maria's preferences for goods A and B can be described by the following marginal utility schedules. Both product A and product B cost $2; Maria has allocated $8 to the purchase of these two products.

Question. Maria should allocate her $8 between A and B as follows

A. 1A, 3B
B. 2A, 2B
C. 3A, 1B
D. 4B

Question. Suppose the price of A falls to $1. Assuming Maria still allocates $8 between the two goods, what amounts of goods A and B maximize her utility at these new prices?

A. 2A, 3B
B. 4A, 2B
C. 4B
D. 3A, 2B

Answer The Following Two Questions:
After working as a head chef for years, Jared gave up his $60,000 salary to open up his own restaurant last year. He withdrew $50,000 of his own savings that had been earning 4% interest and borrowed another $100,000 from the bank at a rate of 5%. As the restaurant space he was leasing had no separate office, Jared converted his basement apartment into office space. He had previously rented the apartment to a students for $300/month. The following table summarizes his operations for the past year.


Question. Jared's economic profit last year was

A. $80,000
B. $78,000
C. $74,400
D. $14,400

Question. Jared's Normal Profit last year was

A. $78,000
B. $14,400
C. $80,000
D. $65,600