ECON 204 Final Exam Fall 2017 9. A firm is producing 100 units of output at a to

Question

ECON 204 Final Exam Fall 2017 9. A firm is producing 100 units of output at a total cost of S800. The firm's average variable cost is S5 per unit. What is the firm's total fixed cost? A. $700 B. S500 C. $400 D. S300 10. Other things being equal, when marginal productivity rises: A. average fixed cost must rise. B. marginal cost must fall. C. average variable cost must rise. D. total cost must fall. 11. If the marginal revenue of the next widget a firm produces is $100 and its marginal cost is $110, a firm should: A. reconsider past production decisions. B. decrease production C. increase production. D. hold production constant. 12. A perfectly competitive firm facing a price of $14 decides to produce 100 widgets. If its marginal cost of producing the last widget is $12 and it is seeking to maximize profit, the firm should: A. produce more widgets B. produce fewer widgets. C. continue producing 100 widgets. D. shut down. 13. Suppose that the firms in the perfectly competitive oat industry are currently receiving a price of $3 per bushel for their product. The minimum possible average total cost of producing oats in the long run is S5 per bushel. Other things being equal, it follows that: A. the price of oats will be S5 in the long run. B. the price of oats will be somewhere between $3 and $5 in the long run. C. the price of oats will be S3 in the long run. D. it is not possible to determine the price of oats in the long run from the information given. 14. The higher the concentration ratio in a given industry, the: A. closer the industry is to a perfectly competitive market structure. B. larger the market shares of the smallest four firms in the industry C. closer the industry is to an oligopolistic or monopolistic type of market structure. D. smaller the market shares of the largest four firms in the industry

Explanation / Answer

9.Ans: D. $300

10.Ans:B. Marginal cost must fall.

11.Ans: B. Decrease production

12.Ans: A. Produce more widgets.

13.Ans:A. The price of the oats will be $5 in the long run

14.Ans: D. Closer the industry is to an oligopolistic or monopolistic type of market structure.

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