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2.9: Problem Sets

  • Page ID
    45694
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    Problem Set 1: Fill the Missing Blanks.

    Exercise \(\PageIndex{1}\)

    What goes in each blank?

    The firm's quantity is 500 units

    Total fixed cost is $1,400

    Total cost is $3,400

    Total variable cost is $____

    The break-even price point is $____

    The short-run shutdown price point is $____

    Average variable cost is $____

    Entry ceases when price falls below $____

    Answer

    The firm's quantity is 500 units

    Total fixed cost is $1,400

    Total cost is $3,400

    Total variable cost is $2,000

    The break-even price point is $6.80

    The short-run shutdown price point is $4.00

    Average variable cost is $4.00

    Entry ceases when price falls below $6.80

    Exercise \(\PageIndex{2}\)

    What goes in each blank?

    The firm's quantity is 1,000 units

    Total fixed cost is $1,500

    Total cost is $3,700

    Total variable cost is $____

    The break-even price point is $____

    The short-run shutdown price point is $____

    Average variable cost is $____

    Entry ceases when price falls below $____

    Answer

    The firm's quantity is 1,000 units

    Total fixed cost is $1,500

    Total cost is $3,700

    Total variable cost is $2,200

    The break-even price point is $3.70

    The short-run shutdown price point is $2.20

    Average variable cost is $2.20

    Entry ceases when price falls below $3.70

    Exercise \(\PageIndex{3}\)

    What goes in each blank?

    The firm's quantity is 2,000 units

    Total fixed cost is $1,400

    Total cost is $3,800

    Total variable cost is $____

    The break-even price point is $____

    The short-run shutdown price point is $____

    Average variable cost is $____

    Entry ceases when price falls below $____

    Answer

    The firm's quantity is 2,000 units

    Total fixed cost is $1,400

    Total cost is $3,800

    Total variable cost is $2,400

    The break-even price point is $1.90

    The short-run shutdown price point is $1.20

    Average variable cost is $1.20

    Entry ceases when price falls below $1.90

    Exercise \(\PageIndex{4}\)

    What goes in each blank?

    The firm's quantity is 500 units

    Total fixed cost is $1,300

    Total cost is $3,900

    Total variable cost is $____

    The break-even price point is $____

    The short-run shutdown price point is $____

    Average variable cost is $____

    Entry ceases when price falls below $____

    Answer

    The firm's quantity is 500 units

    Total fixed cost is $1,300

    Total cost is $3,900

    Total variable cost is $2,600

    The break-even price point is $7.80

    The short-run shutdown price point is $5.20

    Average variable cost is $5.20

    Entry ceases when price falls below $7.80

    Exercise \(\PageIndex{5}\)

    What goes in each blank?

    The firm's quantity is 1,000 units

    Total fixed cost is $1,200

    Total cost is $4,000

    Total variable cost is $____

    The break-even price point is $____

    The short-run shutdown price point is $____

    Average variable cost is $____

    Entry ceases when price falls below $____

    Answer

    The firm's quantity is 1,000 units

    Total fixed cost is $1,200

    Total cost is $4,000

    Total variable cost is $2,800

    The break-even price point is $4.00

    The short-run shutdown price point is $2.80

    Average variable cost is $2.80

    Entry ceases when price falls below $4.00

    Exercise \(\PageIndex{6}\)

    What goes in each blank?

    The firm's quantity is 2,000 units

    Total fixed cost is $1,100

    Total cost is $4,100

    Total variable cost is $____

    The break-even price point is $____

    The short-run shutdown price point is $____

    Average variable cost is $____

    Entry ceases when price falls below $____

    Answer

    The firm's quantity is 2,000 units

    Total fixed cost is $1,100

    Total cost is $4,100

    Total variable cost is $3,000

    The break-even price point is $2.05

    The short-run shutdown price point is $1.50

    Average variable cost is $1.50

    Entry ceases when price falls below $2.05

    Exercise \(\PageIndex{7}\)

    What goes in each blank?

    The firm's quantity is 500 units

    Total fixed cost is $1,000

    Total cost is $4,200

    Total variable cost is $____

    The break-even price point is $____

    The short-run shutdown price point is $____

    Average variable cost is $____

    Entry ceases when price falls below $____

    Answer

    The firm's quantity is 500 units

    Total fixed cost is $1,000

    Total cost is $4,200

    Total variable cost is $3,200

    The break-even price point is $8.40

    The short-run shutdown price point is $6.40

    Average variable cost is $6.40

    Entry ceases when price falls below $8.40

    Exercise \(\PageIndex{8}\)

    What goes in each blank?

    The firm's quantity is 1,000 units

    Total fixed cost is $900

    Total cost is $4,300

    Total variable cost is $____

    The break-even price point is $____

    The short-run shutdown price point is $____

    Average variable cost is $____

    Entry ceases when price falls below $____

    Answer

    The firm's quantity is 1,000 units

    Total fixed cost is $900

    Total cost is $4,300

    Total variable cost is $3,400

    The break-even price point is $4.30

    The short-run shutdown price point is $3.40

    Average variable cost is $3.40

    Entry ceases when price falls below $4.30

    Exercise \(\PageIndex{9}\)

    What goes in each blank?

    The firm's quantity is 2,000 units

    Total fixed cost is $800

    Total cost is $4,400

    Total variable cost is $____

    The break-even price point is $____

    The short-run shutdown price point is $____

    Average variable cost is $____

    Entry ceases when price falls below $____

    Answer

    The firm's quantity is 2,000 units

    Total fixed cost is $800

    Total cost is $4,400

    Total variable cost is $3,600

    The break-even price point is $2.20

    The short-run shutdown price point is $1.80

    Average variable cost is $1.80

    Entry ceases when price falls below $2.20

    Exercise \(\PageIndex{10}\)

    What goes in each blank?

    The firm's quantity is 500 units

    Total fixed cost is $700

    Total cost is $4,500

    Total variable cost is $____

    The break-even price point is $____

    The short-run shutdown price point is $____

    Average variable cost is $____

    Entry ceases when price falls below $____

    Answer

    The firm's quantity is 500 units

    Total fixed cost is $700

    Total cost is $4,500

    Total variable cost is $3,800

    The break-even price point is $9.00

    The short-run shutdown price point is $7.60

    Average variable cost is $7.60

    Entry ceases when price falls below $9.00

    Problem Set 2: Fill the Missing Blanks.

    Exercise \(\PageIndex{1}\)

    What goes in each blank?

    The firm's quantity is ____ units

    Total fixed cost is $____

    Total cost is $3,400

    Total variable cost is $____

    The break-even price point is $6.80

    The short-run shutdown price point is $____

    Average variable cost is $____

    Average fixed cost is $2.80

    Answer

    The firm's quantity is 500 units

    Total fixed cost is $1,400

    Total cost is $3,400

    Total variable cost is $2,000

    The break-even price point is $6.80

    The short-run shutdown price point is $4.00

    Average variable cost is $4.00

    Average fixed cost is $2.80

    Exercise \(\PageIndex{2}\)

    What goes in each blank?

    The firm's quantity is ____ units

    Total fixed cost is $____

    Total cost is $3,700

    Total variable cost is $____

    The break-even price point is $3.70

    The short-run shutdown price point is $____

    Average variable cost is $____

    Average fixed cost is $1.50

    Answer

    The firm's quantity is 1,000 units

    Total fixed cost is $1,500

    Total cost is $3,700

    Total variable cost is $2,200

    The break-even price point is $3.70

    The short-run shutdown price point is $2.20

    Average variable cost is $2.20

    Average fixed cost is $1.50

    Exercise \(\PageIndex{3}\)

    What goes in each blank?

    The firm's quantity is ____ units

    Total fixed cost is $____

    Total cost is $3,800

    Total variable cost is $____

    The break-even price point is $1.90

    The short-run shutdown price point is $____

    Average variable cost is $____

    Average fixed cost is $0.70

    Answer

    The firm's quantity is 2,000 units

    Total fixed cost is $1,400

    Total cost is $3,800

    Total variable cost is $2,400

    The break-even price point is $1.90

    The short-run shutdown price point is $1.20

    Average variable cost is $1.20

    Average fixed cost is $0.70

    Exercise \(\PageIndex{4}\)

    What goes in each blank?

    The firm's quantity is 2,000 units

    Total fixed cost is $1,400

    Total cost is $3,800

    Total variable cost is $2,400

    The break-even price point is $1.90

    The short-run shutdown price point is $1.20

    Average variable cost is $1.20

    Average fixed cost is $0.70

    Answer

    The firm's quantity is 500 units

    Total fixed cost is $1,300

    Total cost is $3,900

    Total variable cost is $2,600

    The break-even price point is $7.80

    The short-run shutdown price point is $5.20

    Average variable cost is $5.20

    Average fixed cost is $2.60

    Exercise \(\PageIndex{5}\)

    What goes in each blank?

    The firm's quantity is ____ units

    Total fixed cost is $____

    Total cost is $4,000

    Total variable cost is $____

    The break-even price point is $4.00

    The short-run shutdown price point is $____

    Average variable cost is $____

    Average fixed cost is $1.20

    Answer

    The firm's quantity is 1,000 units

    Total fixed cost is $1,200

    Total cost is $4,000

    Total variable cost is $2,800

    The break-even price point is $4.00

    The short-run shutdown price point is $2.80

    Average variable cost is $2.80

    Average fixed cost is $1.20

    Exercise \(\PageIndex{6}\)

    What goes in each blank?

    The firm's quantity is ____ units

    Total fixed cost is $____

    Total cost is $4,100

    Total variable cost is $____

    The break-even price point is $2.05

    The short-run shutdown price point is $____

    Average variable cost is $____

    Average fixed cost is $0.55

    Answer

    The firm's quantity is 2,000 units

    Total fixed cost is $1,100

    Total cost is $4,100

    Total variable cost is $3,000

    The break-even price point is $2.05

    The short-run shutdown price point is $1.50

    Average variable cost is $1.50

    Average fixed cost is $0.55

    Exercise \(\PageIndex{7}\)

    What goes in each blank?

    The firm's quantity is ____ units

    Total fixed cost is $____

    Total cost is $4,200

    Total variable cost is $____

    The break-even price point is $8.40

    The short-run shutdown price point is $____

    Average variable cost is $____

    Average fixed cost is $2.00

    Answer

    The firm's quantity is 500 units

    Total fixed cost is $1,000

    Total cost is $4,200

    Total variable cost is $3,200

    The break-even price point is $8.40

    The short-run shutdown price point is $6.40

    Average variable cost is $6.40

    Average fixed cost is $2.00

    Exercise \(\PageIndex{8}\)

    What goes in each blank?

    The firm's quantity is ____ units

    Total fixed cost is $____

    Total cost is $4,300

    Total variable cost is $____

    The break-even price point is $4.30

    The short-run shutdown price point is $____

    Average variable cost is $____

    Average fixed cost is $0.90

    Answer

    The firm's quantity is 1,000 units

    Total fixed cost is $900

    Total cost is $4,300

    Total variable cost is $3,400

    The break-even price point is $4.30

    The short-run shutdown price point is $3.40

    Average variable cost is $3.40

    Average fixed cost is $0.90

    Exercise \(\PageIndex{9}\)

    What goes in each blank?

    The firm's quantity is ____ units

    Total fixed cost is $____

    Total cost is $4,400

    Total variable cost is $____

    The break-even price point is $2.20

    The short-run shutdown price point is $____

    Average variable cost is $____

    Average fixed cost is $0.40

    Answer

    The firm's quantity is 2,000 units

    Total fixed cost is $800

    Total cost is $4,400

    Total variable cost is $3,600

    The break-even price point is $2.20

    The short-run shutdown price point is $1.80

    Average variable cost is $1.80

    Average fixed cost is $0.40

    Exercise \(\PageIndex{10}\)

    What goes in each blank?

    The firm's quantity is ____ units

    Total fixed cost is $____

    Total cost is $4,500

    Total variable cost is $____

    The break-even price point is $9.00

    The short-run shutdown price point is $____

    Average variable cost is $____

    Average fixed cost is $1.40

    Answer

    The firm's quantity is 500 units

    Total fixed cost is $700

    Total cost is $4,500

    Total variable cost is $3,800

    The break-even price point is $9.00

    The short-run shutdown price point is $7.60

    Average variable cost is $7.60

    Average fixed cost is $1.40

    Problem Set 3: Multiple Choice.

    Exercise \(\PageIndex{1}\)
    1. Accounting cost differs from economic cost in that:

    a) Accounting cost does not include fixed cost.

    b) Accounting cost does not include opportunity cost.

    c) Accounting cost is based on supply, but economic cost is based on both supply and demand.

    d) Accounting cost is always larger than economic cost.

    Answer

    b

    Exercise \(\PageIndex{2}\)
    1. Which is true of a profit maximizing and price taking firm that faces a price above its shutdown point?

    a) Marginal cost (MC) = average fixed cost.

    b) It will lower its asking price in order to increase its profits.

    c) MC < Marginal revenue (MR).

    d) Price = MR = MC.

    Answer

    d

    Exercise \(\PageIndex{3}\)
    1. In supply, if the price of good A decreases and the quantity for good B increases then

    a) Good A is a competing product to good B.

    b) Good B is a joint product with good A.

    c) Good A is a necessary luxury good.

    d) Good B is normal necessity good.

    Answer

    a

    Exercise \(\PageIndex{4}\)
    1. Which is true of a price taking firm?

    a) It can sell all that it wants at the going price.

    b) Its actions have a negligible impact on the market price.

    c) It will maximize profits by producing where price is equal to marginal cost.

    d) All of the above.

    Answer

    d

    Exercise \(\PageIndex{5}\)
    1. Which is true of a price taking firm?

    a) It is large and has power to take surplus from consumers in the form of a higher price.

    b) The price it receives is not affected by its output choice.

    c) It can set the market price in order to maximize its profits.

    d) All of the above.

    Answer

    b

    Exercise \(\PageIndex{6}\)
    1. What is true of a price taking firm that faces a price above average variable cost?

    a) It will set its quantity so that its marginal cost will equal the market price.

    b) It has no control over the market price.

    c) The firm’s marginal cost curve is the firm’s supply schedule.

    d) All of the above.

    Answer

    d

    Exercise \(\PageIndex{7}\)
    1. Which causes the inverse supply schedule to decrease or shift inwards (to the left)?

    a) An increase in the price of a joint product.

    b) A decrease in input prices.

    c) An improvement in production technology.

    d) A reduction in production risk.

    e) An increase in the price of a competing product.

    Answer

    e

    Exercise \(\PageIndex{8}\)
    1. Which best describes fixed cost?

    a) Those expenses that vary with output.

    b) Those expenses that result from market power. For example, a single buyer of an agricultural commodity might be able to fix the price and this imposes a large cost on farmers.

    c) Cost that does not vary with output.

    d) Cost that is crucial to identifying the shut-down point.

    Answer

    c

    Exercise \(\PageIndex{9}\)
    1. Which of the following would cause the inverse supply schedule to decrease (shift inwards to the left)?
    1. An increase in the price of a competing product.
    2. An increase in production risk.
    3. An increase in input prices.
    4. All of the above.
    Answer

    d

    Exercise \(\PageIndex{10}\)
    1. Which of the following would cause the supply schedule to increase (shift outwards to the right)?

    a) An increase in consumer incomes.

    b) An increase in the price of a joint product.

    c) An increase in input prices.

    d) All of the above.

    Answer

    b

    Exercise \(\PageIndex{11}\)
    1. In the short run, the firm will continue operating so long as:

    a) Price is above average variable cost (AVC).

    b) Price is above average fixed cost (AFC).

    c) Price is above average total cost (AC).

    d) Price is above the break-even point.

    e) Choices (c) and (d) only.

    Answer

    a

    Use the diagram below to answer the remaining problems in this problem set

    clipboard_e8e1014f7e6bb6efd58a8e12b0030fc8c.png

    Exercise \(\PageIndex{12}\)
    1. Which production plans produce less than point S

    a) Points T, U, and V.

    b) Points U, V, and Y.

    c) Points T and Z.

    d) All of the above.

    e) None of the above.

    Answer

    d

    Exercise \(\PageIndex{13}\)
    1. Which production plans cost less than point T

    a) Points Y and S.

    b) Points U, V, and Y.

    c) Point Z.

    d) Points U and V.

    Answer

    c

    Exercise \(\PageIndex{14}\)
    1. Which production plans do you know cost than same
    1. Points T, U, and V.
    2. Points U, V, and Y.
    3. Points T and Z
    4. Both choices (a) and (c).
    Answer

    a

    Exercise \(\PageIndex{15}\)
    1. Which production plans produce more output than Z

    a) Point S only.

    b) Points S, T, U, V, and Y.

    c) Points S, U, V, and Y.

    d) None of the above.

    Answer

    c

    Exercise \(\PageIndex{16}\)
    1. Which production plans do you know produce the same amount

    a) Points T, U, and V.

    b) Points U, V, and Y.

    c) Points T and Z

    d) Both choices (b) and (c).

    Answer

    d

    Exercise \(\PageIndex{17}\)
    1. Which production plan could be a profit maximum?

    a) Point Z.

    b) Points U or V.

    c) Point S.

    d) Points T or Y.

    Answer

    a

    Exercise \(\PageIndex{18}\)
    1. T produces the same amount as Z

    a) True.

    b) False.

    Answer

    a

    Exercise \(\PageIndex{19}\)
    1. T and Z cost the same

    a) True.

    b) False.

    Answer

    b

    Exercise \(\PageIndex{20}\)
    1. U produces the same amount as V

    a) True.

    b) False.

    Answer

    a

    Exercise \(\PageIndex{21}\)
    1. U and V cost the same

    a) True.

    b) False.

    Answer

    a

    Exercise \(\PageIndex{22}\)
    1. U produces the same amount as Y

    a) True.

    b) False.

    Answer

    a

    Exercise \(\PageIndex{23}\)
    1. U and Y cost the same

    a) True.

    b) False.

    Answer

    b


    This page titled 2.9: Problem Sets is shared under a CC BY-SA 4.0 license and was authored, remixed, and/or curated by Michael R. Thomsen via source content that was edited to the style and standards of the LibreTexts platform.

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