ECON 102 FINAL EXAM WITH 100 FIRE
QUESTIONS AND ANSWERS FOR
PRACTICE.
How do monopolists enjoy long run economic profit? With barriers to entry
How do we find change in profit? Marginal revenue (MR) - Marginal costs (MC)
How do we find marginal utility? (change in total utility)/(change in # of units covered)
How do we find profit? Total revenues (TR) - Total costs (TC)
How do we increase profits when marginal revenue is greater than marginal cost? We
produce more output (Q)
How do you find average fixed cost (AFC)? [fixed cost (TFC)]/[# of units produced(Q)]
** Always decreases when output increases
** Spreading overhead
How do you find average total cost (ATC)? [total cost (TC)]/[# of units produced (Q)]
How do you find average variable cost (AVC)? [variable cost (TVC)]/[# of units produced
(Q)]
How do you find marginal cost (MC)? [change in total cost(TC)]/[change in output(Q)]
How do you find marginal product of capital (MPK)? (change in output)/(change in
capital)
How do you find marginal product of labor (MPL)? (change in output)/(change in labor)
How do you find marginal product? (Change in output)/(change in input)
How do you find the accounting profit? ** Do not think of implicit costs
Revenues - Explicit Costs
How do you find the economic profit? ** Considers "all costs: explicit + implicit costs"
Revenues - All Costs
If eric is a farmer, given the price of corn, he chooses how much to produce is an
example of short run, long run, or both? Long
If kyle produces output and is able to cover his variable cost, but not his fixed cost is this
an example of short run, long run, or both? Short
In perfect competition, what is the price equal to? Marginal revenue (MR)
In the short run, What happens when average total cost (ATC) is greater than price and
price is greater than average variable cost (AVC)? The firm will operate to minimize loss
In the short run, What happens when price is greater than average total cost (ATC)?
The firm makes a profit
In the short run, What happens when the average variable cost (AVC) is greater than
price? The firm will temporarily shut down
Is a computer entering the industry a short run, long run, or both? Long
Is pizza barn opening a new restaurant an example of a short run, long run, or both?
Both
On the long run, what happens when price is greater than average total cost (ATC)?
The firm makes a profit
QUESTIONS AND ANSWERS FOR
PRACTICE.
How do monopolists enjoy long run economic profit? With barriers to entry
How do we find change in profit? Marginal revenue (MR) - Marginal costs (MC)
How do we find marginal utility? (change in total utility)/(change in # of units covered)
How do we find profit? Total revenues (TR) - Total costs (TC)
How do we increase profits when marginal revenue is greater than marginal cost? We
produce more output (Q)
How do you find average fixed cost (AFC)? [fixed cost (TFC)]/[# of units produced(Q)]
** Always decreases when output increases
** Spreading overhead
How do you find average total cost (ATC)? [total cost (TC)]/[# of units produced (Q)]
How do you find average variable cost (AVC)? [variable cost (TVC)]/[# of units produced
(Q)]
How do you find marginal cost (MC)? [change in total cost(TC)]/[change in output(Q)]
How do you find marginal product of capital (MPK)? (change in output)/(change in
capital)
How do you find marginal product of labor (MPL)? (change in output)/(change in labor)
How do you find marginal product? (Change in output)/(change in input)
How do you find the accounting profit? ** Do not think of implicit costs
Revenues - Explicit Costs
How do you find the economic profit? ** Considers "all costs: explicit + implicit costs"
Revenues - All Costs
If eric is a farmer, given the price of corn, he chooses how much to produce is an
example of short run, long run, or both? Long
If kyle produces output and is able to cover his variable cost, but not his fixed cost is this
an example of short run, long run, or both? Short
In perfect competition, what is the price equal to? Marginal revenue (MR)
In the short run, What happens when average total cost (ATC) is greater than price and
price is greater than average variable cost (AVC)? The firm will operate to minimize loss
In the short run, What happens when price is greater than average total cost (ATC)?
The firm makes a profit
In the short run, What happens when the average variable cost (AVC) is greater than
price? The firm will temporarily shut down
Is a computer entering the industry a short run, long run, or both? Long
Is pizza barn opening a new restaurant an example of a short run, long run, or both?
Both
On the long run, what happens when price is greater than average total cost (ATC)?
The firm makes a profit
