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Study for Final Essay

Words: 547, Paragraphs: 3, Pages: 2

Paper type: Essay

1. Under which of the following circumstances will the seller pay the whole of an excise (per unit) tax? a)when the tax is collected from the buyer b)when the supply curve has a zero elasticity c)when the demand curve has a zero elasticity d)when the tax is collected from the seller The following three questions refer to the accompanying diagram of a competitive market. Refer to Figure 3 above. A per unit tax is imposed on consumers. The initial price and quantity are P0 and Q0, respectively. After the tax is imposed, the equilibrium quantity is Q1, firms receive the price Ps, and consumers pay the price Pd. . Area C + D + F + G is a)the tax revenue collected by the government b)the total value that consumers receive from their purchases c)the fall in producers’ surplus d)the deadweight loss due to the tax 3. Refer to Figure 3 above. Which is the deadweight loss from the imposition of the tax? a)E b)E + H c)H d)J e)E + H + J 4. In the perfectly competitive firm a)the demand curve appears to be horizontal b)the supply curve appears to be horizontal c)the supply curve is the MC curve above average variable costs d)the supply curve is the MC curve above average fixed costs e)a and c of the above . For a firm in short run perfectly competitive equilibrium a)P=MC b)AR=MC c)AR=MR d)all of the above e)a and b of the above 6. In short run perfectly competitive equilibrium, profits for the typical firm are given by (* indicate the value at the firm’s profit maximizing quantity) a)(P*-MC*)q* b)(P*-AC*)q* c)(MR*-AC*)q* d)(MC*-AC*)q* e)all but a above 7. A firm that is in short run competitive equilibrium and for whom PAVC a)will produce a zero output b)will leave the industry c)will produce the profit maximizing output d)a and c of the above e)none of the above 8.

When a simple monopolist – no price discrimination – chooses to sell an additional unit of a good or service a)marginal revenue will be equal to the going market price b)it will have to lower its price on the additional unit and on all other units c)marginal revenue will always be negative d)marginal revenue will be less than the price e)b and d QuantityPriceTotal RevenueAverage RevenueMarginal Revenue 135 35 2 6432 29 329 4 17 523 11 6120 717 -1 8 -7 9 9911-13 9. If the monopolist wants to maximize its revenue, how many units of its product should it sell? a)4 b)5 c)6 d)8 10.

Assume this monopolist’s marginal cost is constant at $11. What quantity of output (Q) will it produce and what price (P) will it charge? a)Q = 4, P = $27 b)Q = 4, P = $25 c)Q = 5, P = $23 d)Q = 7, P = $17 Suppose that the industry price of this product is $12 in a competitive industry. Every firm in the industry has fixed costs of $10 and has the following marginal cost s: Quantity Marginal Cost 1 $4 2 6 3 8 4 10 5 12 11. How many units does a firm produce? a)2 b)3 c)4 d)5 e)Not enough information 12. How much profit does the firm earn? a)2 b)6 c)8 d)10 e)Not enough information

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