ECN 302: Fall 2013 Quiz 1 Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Refer to the information provided in Figure 8.8 below to answer the questions that follow. Figure 8.8 1) Refer to Figure 8.8. If this farmer is producing the profit-maximizing level of output, her profit is A) $0. B) $2,800. C) $3,000. D) $12,000. 1) Refer to the information provided in Figure 9.7 below to answer the questions that follow. Figure 9.7 2) Refer to Figure 9.7. In which of the following price ranges will the firm continue to operate but at a loss? A) $5-$6 B) $6-$7 C) $7-$8 D) $8-$9 2) 3) Refer to Figure 9.7. The firm’s shut down point is at a price of A) $5 B) $6 C) $7 D) $8 3)
4) Refer to Figure 9.7. Suppose demand for wheat is initially D2. If the price of rice (a substitute for wheat) falls, then demand for wheat will shift to ________. This will ________ the equilibrium price of wheat and individual profit maximizing firms will produce ________ bushels of wheat. A) D1; increase; 13 B) D1; decrease; 0 C) D3; increase; 15 D) D3; decrease; 10 4) 5) Refer to Figure 9.7. If demand for wheat is D3, then in the long run A) the firm will exit the industry. B) new firms will enter the industry. C) the firm will shut down. D) None of the above is correct. 5) 6) Refer to Figure 9.7. If demand for wheat is D1, then in the long run A) the firm will exit the industry. B) new firms will enter the industry. C) the firm will increase its price and output. D) firms will increase their output so that their average fixed cost per unit falls. 6) 7) The Pampered Pet Shop operates in a perfectly competitive industry and hires you as an economic consultant. The firm is currently producing at a point where market price equals its marginal cost. Its total revenue exceeds its total variable cost, but is less than its total cost. You advise the firm to A) lower its price so that it can sell more units of…