econ quiz

1. Lynn is thinking about leaving her job as a CPA to open a clothing store. The estimated revenue for a year is $200,000. Her costs are $120,000 in rent, insurance, utilities, equipment, and inventory. She would also be forgoing her wages of $75,000 in order to run her business full time.

a. What is her accounting profit?

b. What is her opportunity costs?

c. What is her economic profit? 

d. Should she leave her job and open this clothing store?

2.

Total Product, Marginal Product, and Average Product
# of workers	Total Product	Marginal Product	Average Product
1	57
2	118
3	177
4	228

1.

1. Calculate marginal product of labor and average product of labor.

1. How many worker should this firm keep? Why?

1. A carrot farmer operates in a perfectly competitive market. The price for a bushel of carrots is $11. Calculate the missing values and answer the questions below:

Revenue and Cost
Quantity of Carrots (Q)	Total Revenue (TR)	Marginal Revenue (MR)	Total Cost (TC)	Marginal Cost (MC)	Profit
0	$0		$16
1	11		22
2	22		27.50
3	33		34
4	44		42
5	55		53
6	66		65

1. What is the farmer's fixed cost?

2. What is the profit maximizing level of output?

1. Consider a monopoly firm's revenue and costs. Calculate the missing values and answer the questions below:

Revenue and Cost
Quantity (Q)	Price	Total Revenue (TR)	Marginal Revenue (MR)	Total Cost (TC)	Marginal Cost (MC)	Average Cost (AC)	Profit
0	$44		---	$60	---	---
1	41			72
2	38			82
3	35			87
4	32			88
5	29			90
6	26			93
7	23			98
8	20			108
9	17			120
10	14			140

1. What is the fixed cost of this firm?

2. What is the profit maximizing level of output and price?