Microeconomics Unit 3
Milestone ) Exam Questions
and Correct Solutions
Average total costs are equal to __________. - Correct Answers: average variable plus average fixed
costs
In which type of market structure might we see firms attempting to collude with one another to set
prices? - Correct Answers: Oligopoly
Based on the descriptions below of different jobs Nancy has held, which would qualify as an oligopoly? -
Correct Answers: Nancy was an administrative assistant for an oil company with very few other sellers.
Other companies had trouble getting into the fossil fuel market. All the fossil fuel companies had the
same information, but they had an information advantage over the buyers.
When a firm uses four machines, it can produce 300 units daily. A fifth machine allows the firm to
product 440 units. Which of the following is true regarding production? - Correct Answers: The marginal
product for the fifth machine is 140 units and the average product is 88 units.
Which of the following market structures has only one seller, who acts as a price maker? - Correct
Answers: Monopoly
Sergio leaves his job as a hockey coach to open his own skate sharpening shop at a local rink. Sergio is
confident that the skate sharpening business will earn him more than the $500 per week that he earned
at his coaching position.
Sergio's business is good; he averages 100 pairs of skates per week, and charges $8 per pair to sharpen
skates. He does all of the work himself, but has to pay the rink $150 per week for the lease on the
equipment.
Is Sergio better off operating his own business? - Correct Answers: Yes, he is now earning an economic
profit of $150 per week.
Which type of firms will belong to a decreasing cost industry at high output levels? - Correct Answers:
Monopoly
Milestone ) Exam Questions
and Correct Solutions
Average total costs are equal to __________. - Correct Answers: average variable plus average fixed
costs
In which type of market structure might we see firms attempting to collude with one another to set
prices? - Correct Answers: Oligopoly
Based on the descriptions below of different jobs Nancy has held, which would qualify as an oligopoly? -
Correct Answers: Nancy was an administrative assistant for an oil company with very few other sellers.
Other companies had trouble getting into the fossil fuel market. All the fossil fuel companies had the
same information, but they had an information advantage over the buyers.
When a firm uses four machines, it can produce 300 units daily. A fifth machine allows the firm to
product 440 units. Which of the following is true regarding production? - Correct Answers: The marginal
product for the fifth machine is 140 units and the average product is 88 units.
Which of the following market structures has only one seller, who acts as a price maker? - Correct
Answers: Monopoly
Sergio leaves his job as a hockey coach to open his own skate sharpening shop at a local rink. Sergio is
confident that the skate sharpening business will earn him more than the $500 per week that he earned
at his coaching position.
Sergio's business is good; he averages 100 pairs of skates per week, and charges $8 per pair to sharpen
skates. He does all of the work himself, but has to pay the rink $150 per week for the lease on the
equipment.
Is Sergio better off operating his own business? - Correct Answers: Yes, he is now earning an economic
profit of $150 per week.
Which type of firms will belong to a decreasing cost industry at high output levels? - Correct Answers:
Monopoly
