Unit 3 check
Unit 3 check: Production, Cost, and the Perfect Competition Model
10 questions from 7 lessons in Unit 3. Answer each one, and if you miss, follow the link back to where it is taught, then try again. Your score counts first tries.
Question 1 · from 3.1 · Sort it
Each card is a change a firm makes. Tap a card, then tap the time frame it belongs to.
Short run
Long run
Question 2 · from 3.2 · Match
A firm's total fixed cost is $40. At 4 units of output its total variable cost is $80, and at 3 units its total cost was $105. Tap a measure, then tap its value at 4 units.
Question 3 · from 3.3 · Decide and justify
A firm's long-run average total cost is $12 a unit at 1,000 units a week, $9 at 2,000, $8 at 3,000, $8 at 4,000, $8 at 5,000 and $10 at 6,000. Which describes the firm as it grows from 3,000 to 5,000 units a week?
Which reason supports your choice?
Setup for question 4
Rosa and Theo each own and run a coffee cart. Each gave up a job to do it and put some of their own savings into the cart. Neither owner has any other implicit costs. The table shows last year's figures for both carts.
| Item | Rosa's cart | Theo's cart |
|---|---|---|
| Total revenue | $90,000 | $120,000 |
| Explicit costs | $40,000 | $55,000 |
| Salary the owner gave up | $38,000 | $70,000 |
| Interest the owner's savings would have earned | $2,000 | $1,000 |
Question 4 · from 3.4 · Calculate
What was the economic profit of Theo's cart last year, in dollars? Give a negative number for a loss.
Setup for question 5
Lakeside Charters runs guided fishing trips. There are many such businesses on the lake, so Lakeside can sell as many trips as it wants at the going price of $300 a trip. The table shows its total cost for each number of trips a week.
| Trips per week | Total cost |
|---|---|
| 0 | $200 |
| 1 | $450 |
| 2 | $630 |
| 3 | $830 |
| 4 | $1,070 |
| 5 | $1,360 |
| 6 | $1,710 |
| 7 | $2,130 |
Question 5 · from 3.5 · Calculate
How many trips a week should Lakeside run to maximize its profit?
Setup for question 6
A pottery studio sells mugs in a perfectly competitive market, where the price is $16 a mug. Its fixed cost is $40 a day. The table shows its total cost at each daily output.
| Mugs a day | Total cost |
|---|---|
| 0 | $40 |
| 1 | $54 |
| 2 | $64 |
| 3 | $72 |
| 4 | $82 |
| 5 | $96 |
| 6 | $116 |
| 7 | $144 |
Question 6 · from 3.6 · Fill the statement
Suppose the market price is $16 a mug and every studio in the market has this cost table. Tap a blank, then tap a word or phrase.
In the long run, studios will the market, and the market price of a mug will .
Setup for question 7
Fresh basil is sold in a perfectly competitive market, and anyone may start a basil farm. The graph shows the whole market, where the price is set. The table beside it shows the daily total cost of Green Row, one typical basil farm, which takes that price as given. Green Row's fixed cost is $17 a day.
The market for basil
Market demand D and market supply S cross at a price of $12 a crate and a quantity of 400 thousand crates a day.
| Crates a day | Total cost |
|---|---|
| 0 | $17 |
| 1 | $26 |
| 2 | $32 |
| 3 | $36 |
| 4 | $42 |
| 5 | $50 |
| 6 | $61 |
| 7 | $75 |
| 8 | $94 |
Question 7 · from 3.7 · Multiple choice
Suppose Green Row's costs are typical and basil farms' costs do not change as farms enter or leave. What will the market price of a crate be once the market reaches long-run equilibrium?
Question 8 · from 3.1 · Calculate
A print shop with a fixed number of presses prints 54 posters an hour with 3 workers and 68 posters an hour with 4 workers. What is the marginal product of the 4th worker, in posters an hour?
Question 9 · from 3.2 · Calculate
A firm pays each worker $120 a day, and labor is its only variable input. Its 3rd worker adds 40 units a day and its 4th worker adds 30 units a day. What is the marginal cost of each unit the 4th worker adds, in dollars?
Question 10 · from 3.3 · Calculate
In a market for bricks, buyers want 600,000 tons a year at a price equal to the lowest long-run average total cost. A brick maker's LRATC first reaches that lowest level at 150,000 tons a year and stays there up to 300,000 tons. What is the largest number of brick makers that could each produce at least the minimum efficient scale?
0 of 10 answered.