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Exam 6: Efficiency and Exchange

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Question 1

Multiple Choice

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-Use the data in the table above.The marginal revenue for each additional batch of five units of output is

A) $1.
B) $5.
C) $25.
D) $25/Q.
E) unknown.

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Question 2

Multiple Choice

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Sidney Crosby's economic rent from playing hockey in the NHL is equal to the difference between his

A) initial offer and his final salary.
B) initial offer and his team's initial offer.
C) final salary and the least he would be willing to accept to play in the NHL.
D) final salary and the average for players in the NHL.
E) final salary and his team's initial offer.

Correct Answer

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C

Question 3

Multiple Choice

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Barriers to entry are

If the owners of a business are receiving total revenue sufficient to cover all their explicit and implicit costs,they are

If economic profit is negative but accounting profit is positive,then

Superstar professional athletes can sustain their economic rents because

If firms are exiting a perfectly competitive industry,this suggests that

Generally,______ motivate firms to enter an industry,while ______ motivate firms to exit an industry.

-Refer to the diagram above.The firm is experiencing diseconomies of scale when output is

Right Panel: The market: a shift of short-run supply in response to an increase in demand. -Refer to the diagrams above.If the market demand for wheat and the market supply of wheat are represented by D and SRS,respectively,the firm will charge ___ per bushel and produce ____thousand bushels of wheat per year.

-Refer to the diagram above.The firm is experiencing economies of scale when output is

The value of income received by a firm in return for supplying goods and services is called

-Refer to the graph above.If a firm was originally producing on SATC3 but now desires to reduce its output to 600 units,in the short run it will use the plant size represented by

If accounting profit is positive,then

Right Panel: The market: a shift of short-run supply in response to an increase in demand. -Refer to the diagrams above.If the market demand for wheat and the market supply of wheat are represented by D and SRS,respectively,the total costs of the firm at the profit-maximizing output are equal to

Right Panel: The market: a shift of short-run supply in response to an increase in demand. -Refer to the diagrams above.If the market demand for wheat and the market supply of wheat are represented by D' and SRS,respectively,the firm is making a profit of

A firm earning a normal profit

Economic profit is

Suppose that Robert is willing to work for $10 per hour and receives an offer of $15 per hour.Robert's

Harvey quit his job at the University of Toronto where he earned $45,000 a year,the same as other employees of normal ability,the same as other employees of normal ability.But Harvey is unusually talented in another area,and he figures his entrepreneurial talent,or forgone entrepreneurial income,to be $5000 a year.He cashed in $100,000 in bonds that earned 10% interest annually to buy a software company,Extreme Gaming.In the first year,the firm sold 11,000 units of software at $75 per unit.Of the $75 per unit,$55 goes for the costs of production,packaging,marketing,employee wages and benefits,and rent on a building. -Refer to the above information.If the price of the product increases to $85,then the economic profit will be