principles of microeconomics practice exam#3 with answer keys

1- The total unit cost = Total Variable Cost + Production Fixed Expenses + Advertising Expense + Selling and Administrative Expense = 3.23 + 1.20 + 0.30 + 0.19 = 4.92.

11. If 8,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is the total amount expressed on a per unit basis?

Subsequently, an increase in population increases the demand for haircuts. In the short run, we expect that the typical firm is likely to begin:

Simon is a hardworking and confident contributor to class discussions who unfortunately performed poorly in the Unit 1 Assessment where he confused key areas of microeconomics. Nevertheless, Simon has a lot of potential in the subject if he can master the technical detail of Microeconomics. To do this, I would encourage him to sort out his notes on Microeconomics and to seek help if there are topics he is unsure of. In January, Simon will resit the areas of the Unit Assessment where he did not pass. Following my advice will ensure a successful

The gross profit margin for each product produced based on the ABC data can be determined by the selling price minus the ABC cost per unit multiplied by the units produced (Edmonds, Tsay, & Olds, 2011). Product GS-157, selling price per unit $19.30 minus ABC cost per unit $12.50 equals $6.80 multiplied by the units produced 120,000 equals the ABC gross profit margin $816,000 (Edmonds, Tsay, & Olds, 2011). Product HS-241, selling price per unit $17.50 minus ABC cost per unit $11.67 equals $5.83 multiplied by the units produced 90,000 equals the ABC gross profit margin $525,000 (Edmonds, Tsay, & Olds, 2011). Product OS-367. Selling price per unit $15.10 minus ABC cost per unit $13.75 equals $1.35 multiplied by the units produced 40,000 equals

In this case, the profit is positive however for perfectly competitive markets in this situation, there will be zero profits in the long-run.

If demand is perfectly inelastic, the demand curve is vertical. The supply curve shifts up by $1, and all of the incidence falls on consumers. Price increases by $1, and there is no change in quantity. Since   0, dP/d  1.

If the "by-product" units (400s) are considered a joint product, the average cost is $.40 per unit ($200,000 ÷ 500,000 units).

Question 1: "The economic rationale for road pricing is compelling", Institute for Fiscal Studies, May 2012. Critically discuss this statement.

Graph is a straight line on consumption-leisure space, whose slope is –2(=-10/5), the intercept on the horizontal axis is 100, and that of the vertical axis is 200. (2 marks)

Refer to Figure 3 above. A per unit tax is imposed on consumers. The initial price and quantity are

1. Suppose that the total cost of manufacturing q units of a certain product is C  q  thousand dollars, where

Supply is a curve showing the different amounts of a product suppliers are willing to provide at different prices. Equilibrium price and quantity are determined by the intersection of demand and supply. Price elasticity of demand (PED) indicates the responsiveness of consumers to a change in price, and is reflected in the relative slope of demand.

2. Assume a monopolist faces a market demand curve P = 100 – 2Q, and has the short-run total cost function C = 640 + 20Q. What is the profit-maximizing level of output? What are profits? Graph the marginal revenue, marginal cost, and demand curves, and show the area that represents deadweight loss on the graph. 3. In question 2, what would price and output be if the firm priced at socially efficient (competitive) levels? What is the magnitude of the deadweight loss caused by monopoly pricing? 4. Show that if a firm is a natural monopoly, a government policy that forces marginal cost pricing will result in losses for the firm. 5. Suppose a change in technology available to fringe firms increases their elasticity of supply,

Producer surplus / worker surplus = S – D = 20 000 – 5 000 = 15 000