Sophia: UNIT 3 — MILESTONE 3: Economics. Score 21/21

Sophia :: Welcome UNIT 3 — MILESTONE 3 Score 21/21 You passed this Milestone 21 questions were answered correctly. 1 Which of the following is why the long run average cost curve must lie at the same level or be ...

Sophia :: Welcome UNIT 3 — MILESTONE 3 Score 21/21 You passed this Milestone 21 questions were answered correctly. 1 Which of the following is why the long run average cost curve must lie at the same level or below any short run average cost curve? Because of economies of scale Because of the law of diminishing returns Because in the long run, a firm will generally operate at higher per-unit cost than in the short run Because in the long run, all production costs are variable CONCEPT8/17/2020 Sophia :: Welcome https://capella.sophia.org/spcc/microeconomics-2/milestone_take_feedbacks/5736688 2/17 Long-Run Supply Curve 2 Which of the following market structures has only one seller, who acts as a price maker? Monopolistic competition Monopoly Perfect competition Oligopoly CONCEPT Monopoly 3 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? The marginal product for the fifth machine is 140 units and the average product is 88 units. The marginal product for the fourth machine is 300 and the average product is 75 units The total production for nine machines would be 740 units with an average production of 123.33 units.8/17/2020 Sophia :: Welcome https://capella.sophia.org/spcc/microeconomics-2/milestone_take_feedbacks/5736688 3/17 The marginal production for the fifth machine is 440 units and total production would be 740 units. CONCEPT Product: Total, Marginal, Average, and (Marginal) Revenue 4 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? Yes, he is earning an economic profit of $800 each week. No, he should have stayed at the coaching position where he earned $500 per week. No, he is only earning $150 per week. Yes, he is now earning an economic profit of $150 per week. CONCEPT Economic Profit 58/17/2020 Sophia :: Welcome https://capella.sophia.org/spcc/microeconomics-2/milestone_take_feedbacks/5736688 4/17 Given the graph shown here, when is the firm operating at a short run loss? At Q1 Between Q1 and Q2 When MC (the purple line) is greater than Q1 At Q28/17/2020 Sophia :: Welcome https://capella.sophia.org/spcc/microeconomics-2/milestone_take_feedbacks/5736688 5/17 CONCEPT Shut-down Point 6 Given the information on this graph, this firm needs to produce which of the following number of units to start making a profit? 10 118/17/2020 Sophia :: Welcome https://capella.sophia.org/spcc/microeconomics-2/milestone_take_feedbacks/5736688 6/17 12 14 CONCEPT Breakeven Point 7 Which scenario corresponds with economies of scale? An increase in production will cause the cost of the next unit to increase. A decrease in production will cause the next unit to first increase in cost, then decrease, then increase again. A decrease in production will cause the next unit to cost the same. An increase in production will cause the cost of the next unit to decrease. CONCEPT Economies, Constant and Diseconomies of Scale 88/17/2020 Sophia :: Welcome https://capella.sophia.org/spcc/microeconomics-2/milestone_take_feedbacks/5736688 7/17 Based on this graph, what amount should the company choose to produce to maximize profit? 49 65 808/17/2020 Sophia :: Welcome https://capella.sophia.org/spcc/microeconomics-2/milestone_take_feedbacks/5736688 8/17 0 71 CONCEPT Output Optimization: Total Revenue / Total Cost 9 Which example below represents an oligopoly? In the country where this company is located, government regulations prevent competition from other companies. In this industry, groups of firms work together to establish stable pricing. A farmer grows corn that is identical to all of the other corn grown in that region. A company produces jeans that are pretty much the same as other jeans on the market, except for their advertising, which features a worldfamous supermodel. CONCEPT Oligopoly 108/17/2020 Sophia :: Welcome https://capella.sophia.org/spcc/microeconomics-2/milestone_take_feedbacks/5736688 9/17 This firm is currently producing at 25 units; which of the following should it do in order to maximize profit? The firm should decrease output. The firm should increase output to 80 units. The firm should shut down production entirely. The firm should do nothing. It is already producing at maximum optimization.8/17/2020 Sophia :: Welcome https://capella.sophia.org/spcc/microeconomics-2/milestone_take_feedbacks/5736688 10/17 CONCEPT Output Optimization: Marginal Revenue / Marginal Cost 11 Number of Employees Total Production Marginal Product of Labor Marginal Revenue Product 0 0 0 1 9 9 2 24 15 3 36 12 4 43 7 If the price of the item is $15.00 per unit and the employees cost $125 each, how many employees should the firm hire to maximize their profit? Three employees One employees Four employees Two employees CONCEPT Output Optimization: Marginal Revenue Product 12 Which of the following is a trait of a perfectly competitive market?8/17/2020 Sophia :: Welcome https://capella.sophia.org/spcc/microeconomics-2/milestone_take_feedbacks/5736688 11/17 Information flows freely Firms are not producing at minimum cost Firms are price makers Barriers to entry exist CONCEPT Perfect Competition 13 Which type of market structure has many small firms that spend money in order to differentiate their products through advertising? Perfect competition Oligopoly Monopoly Monopolistic competition CONCEPT8/17/2020 Sophia :: Welcome https://capella.sophia.org/spcc/microeconomics-2/milestone_take_feedbacks/5736688 12/17 Monopolistic Competition 14 Ben's Bagels charges $10 per dozen bagels and he sells 30 dozen bagels each day. Ben's costs of production total $150 each day. Ben recently quit his job where he earns $100 per day in order to open his bagel store. Ben's accounting profit per day would be __________. $300 $450 $150 $50 CONCEPT Accounting Profit 15 The prisoner’s dilemma in an economic context can be explained as which of the following? A model used to illustrate why collusion tends to break down A model showing how a firm should make decisions when variable cost is high and profit is not8/17/2020 Sophia :: Welcome https://capella.sophia.org/spcc/microeconomics-2/milestone_take_feedbacks/5736688 13/17 A model showing the sacrifice made by a firm when choosing one value or opportunity over another A model showing when running at a loss would actually be beneficial in the long run CONCEPT Oligopoly 16 Which of the following is true regarding how a market type interacts with constant, increasing and decreasing cost industries? In a perfectly competitive market, firms will usually experience significant economies of scale until very high levels of output. In a natural monopoly, firms will always reach diseconomies of scale at high levels of output. In a monopoly, firms are likely to begin experiencing diseconomies of scale at relatively low levels of output. In a perfectly competitive market, firms tend to experience diseconomies of scale at relatively low levels of output. CONCEPT Constant, Increasing and Decreasing Cost Industries 17 If variable costs for a firm are $800, the average total costs are $6, and the firm sells 175 units, what are the firm's fixed costs? $2508/17/2020 Sophia :: Welcome https://capella.sophia.org/spcc/microeconomics-2/milestone_take_feedbacks/5736688 14/17 $975 $162.50 $1050 CONCEPT Cost: Total, Marginal and Average 18 Select the definition of output effect. Amount of revenue lost from lowering the price enough to sell one more unit The additional revenue from raising the price of a good The revenue that results from selling additional units of a good or service. Market price multiplied by the number of units sold CONCEPT Revenue: Total, Marginal and Average 198/17/2020 Sophia :: Welcome https://capella.sophia.org/spcc/microeconomics-2/milestone_take_feedbacks/5736688 15/17 Which of the following is true about marginal cost? The marginal cost will consistently fall with an increase in production. In the long run, every firm’s marginal cost must equal zero. Marginal cost is the change in total cost that results from a single unit increase in the quantity produced. Marginal cost can be found at the intersection of a firm's budget constraints and production function. CONCEPT Cost: Total, Marginal and Average 20 A variable input is one that __________. will always have increasing costs is highly expensive to change in the long run will change as a result of changes in production will not change over the scope of production8/17/2020 Sophia :: Welcome https://capella.sophia.org/spcc/microeconomics-2/milestone_take_feedbacks/5736688 16/17 CONCEPT Production Function and Constraints 21 Using the graph above, the firm is best served producing at __________. Point A Point B8/17/2020 Sophia :: Welcome https://capella.sophia.org/spcc/microeconomics-2/milestone_take_feedbacks/5736688 17/17 Point C Point D CONCEPT Production Function and Constraints