Table: Competitive Firm

Quantity (Units) Total Revenue ($) Total Cost ($)

0     0     50
1     90     80
2 180 120
3 270 170
4 360 230
5 450 300
6 540 380
7 630 470
8 720 570

1. (Table: Competitive Firm) The marginal cost of the fifth unit of output is:
A) $70.
B) $90.
C) $450.
D) $300.

2. (Table: Competitive Firm) Refer to the table. The fixed cost for this firm is:
A) $80.
B) $90.
C) $50.
D) $100.

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Use the following to answer question 3:

Figure: Price Floor

3. (Figure: Price Floor) Refer to the figure. How much unemployment results from the
imposition of a price floor set at $10?
A) 100 units
B) 310 units
C) 50 units
D) 210 units

Use the following to answer question 4:

Figure: Minimum Wage

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 4. (Figure: Minimum Wage) Refer to the figure. At a minimum wage of $8, firms are
willing to hire ________ workers.
A) 45
B) 25
C) 35
D) more than 45

Use the following to answer question 5:

Figure: Price Ceiling

5. (Figure: Price Ceiling) Refer to the figure. When a price ceiling of $10 is instituted by the
government, consumers are able to buy how many units of the product?
A) 290 units
B) 310 units
C) 270 units
D) 40 units

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Use the following to answer question 6:

Figure: Price Ceiling of Ps

6. (Figure: Price Ceiling of Ps) Refer to the figure. Suppose a price ceiling of Ps is imposed.
As a result:
A) The quantity supplied in the market is Qs.
B) Buyers' willingness to pay for the good is Pd.
C) The quantity demanded in the market is Qd.
D) All of the answers are correct.

Use the following to answer question 7:

Figure: Costs

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 7. (Figure: Costs) Use the figure. At a price of $20, the firm earns profit of:
A) $75.
B) $300.
C) $225.
D) $0, because P = MC at P = $20.

8. Deadweight loss is:

A) necessary to ensure that resources are channeled to their highest-valued use.
B) the loss to the economy from firms going out of business due to competition.
C) usually offset by deadweight gains.
D) the total of lost consumer and producer surplus when not all mutually profitable
gains from trade are exploited.

9. Which statement is NOT an effect of a price ceiling?

A) surpluses
B) misallocation of resources
C) loss of gains from trade
D) wasteful lineups

10. When marginal cost is rising, the average total costs:

A) could be rising or falling.
B) must be rising.
C) must be falling.
D) must be constant.

11. Total cost in economics incorporates:

A) implicit and explicit cost.
B) implicit cost only.
C) explicit cost only.
D) neither explicit nor implicit cost.

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