The following questions refer to the graph below, which shows the cost curves of a firm. A graph in the first quadrant is shown with price on the vertical axis and quantity on the horizontal axis. Three curves are shown, all concave up everywhere, decreasing on the left before reaching a minimum and increasing to the right. The first curve is labeled long-run average total cost, which has its minimum near the center of the graph. The second curve is labeled short-run average total cost which has its minimum above and to the left of the long-run average total cost curve. The two curves touch, but do not intersect, to the right of the minimum of the long-run average total cost-curve, so the short-run average total cost curve is always above the other curve. The third curve labeled short-run marginal cost has its minimum in the lower left corner and intersects the short-run then the long-run average total cost curves to the right of the point where those two curves touch. A value P sub 1 is labeled on the vertical axis above all of the minimums and a horizontal reference line is drawn there, intersecting the long-run and short-run average total cost curves near the point where they touch before intersecting the short-run marginal cost curve. A value Q sub 1 is labeled on the horizontal axis with a vertical reference line drawn that intersects the long-run then short-run average total cost curves. If the firm produces Q1 units of output with two inputs, the firm will be experiencing which of the following in the short run and in the long run?

Assume that a 2 percent increase in the price of bologna causes a 5 percent decrease in the demand for cheese. What is the cross-price elasticity of demand between the two goods, and how are these goods related?

The chart below gives a firm’s total cost of producing different levels of output. Table: Firms Output and Total Cost Output Total Cost 0 $13 1 20 2 25 3 28 4 32 5 43 6 60 The profit-maximizing level of output for this firm is

Which of the choices outlines the area corresponding to the deadweight loss created by the tax? A graph in the first quadrant is shown with price on the vertical axis and quantity on the horizontal axis. Two parallel lines are plotted starting in the lower left corner and increasing with the upper line labeled S sub 1 and the lower line labeled S, and a double ended arrow labeled t points between them. A third line labeled D is plotted starting in the upper left corner and decreasing, intersecting both increasing lines near the center of the graph. Three values P sub 1, P sub 0, and P sub 2 equals P sub 1 minus t are labeled from top to bottom on the vertical axis, and two values Q sub 1 and Q sub 0 are labeled from left to right on the horizontal axis. Dashed reference lines are drawn from these labeled values. Five points G through K are labeled on the graph. Point G has coordinates Q sub 1 and P sub 1 and is at the intersection of lines D and S sub 1. Point H has coordinates Q sub 1 and P sub 0 and is between lines S sub 1 and S, below line D. Point I has coordinates Q sub 1 and P sub 2 and is on line S. Point J has coordinates Q sub 0 and P sub 1 and is between lines S sub 1 and S, above line D. Point K has coordinates Q sub 0 and P sub 0 and is at the intersection of lines D and S.

The figure presents a graph of a firm’s long run average total cost curve, abbreviated as the L R A T C curve. The horizontal axis is labeled Output, and from left to right, quantities Q sub 0 and Q sub 1 are indicated. The vertical axis is labeled Cost. The L R A T C curve begins slightly to the right of, and approximately halfway up, the vertical axis. It moves downward and to the right, steeply at first, and then begins to level out as it reaches a point directly above Q sub 0. It then moves to the right, parallel to the horizontal axis, from Q sub 0 to Q sub 1. It then moves upward and to the right, gradually at first and then more steeply, until it ends above the right side of the horizontal axis at approximately the same height as its starting point. The graph above shows a firm’s long-run average total cost curve (LRATC). Which of the following statements is true as the firm increases its scale of production?

Dylan recently quit his job as a journalist for a local newspaper where he was making $80,000 per year. He opened an ice-cream shop where he earns a yearly total revenue of $250,000. He spends $150,000 each year on rent, resources, and workers he hires. Which of the following equals Dylan’s accounting profit and economic profit from the ice-cream shop? Table: Dylan’s Acounting and Economic Profit Accounting Profit Economic Profit A $250,000 $20,000 B $230,000 $100,000 C $150,000 $70,000 D $100,000 $80,000 E $100,000 $20,000

A farmer grows wheat using two inputs: labor and land whose prices are constant. If she doubles her inputs, she finds that the quantity of wheat produced more than doubles. Therefore, it must be true that in this output range her long-run average total cost curve is

A short-run production function shows the relationship between a firm’s inputs and the output it produces when the firm

If the government imposes a tariff on imports of cheese, the price and quantity of imported cheese will most likely change in which of the following ways?

Table: Evergreen and Nature Payoff Matrix Nature View Evergreen Bids High Bids Low Bids High $600, $300 $520, $400 Bids Low $720, $100 $500, $200 Evergreen and Nature View are bidding for a landscaping contract. The payoff matrix above shows what each firm’s total weekly profits from all its operations will be for each combination of bids. The first entry in each cell shows Evergreen’s profit, and the second entry in each cell shows Nature View’s profit. A Nash equilibrium results under which of the following conditions?