Question

A. If Glass Inc. produces 80 window panes per day at the market price of $60 in a perfectly competitive market, what would happen to price if Glass Inc. increases production to 120 window panes, all else equal?

The price would decrease as production by Glass Inc. rises.

The price would fluctuate in an unknown pattern.

The price would remain the same.

The price would increase as production by Glass Inc. rises.

1. If the total variable cost of producing three wickets is $30, while the average fixed cost of producing three wickets is $25, then the total cost of producing three wickets is:

$165.

$105.

$55.

$115.

2.    Dan's Car Wash produces $150,000 in revenues and incurs $120,000 in labor wages, materials, rent, and other explicit costs. Moreover, Dan gave up a $40,000-a-year job as a hotel valet to start his car wash business. Dan's economic profit is _____, and he _____ earning a normal profit.

	$30,000; is
	–$10,000; is
	$30,000; is not
	–$10,000; is not

3. Due to a drought in Georgia, the market price for peanuts rises by 20% nationwide. If the price elasticity of demand for peanuts is 0.8, what would happen to total revenue for peanut farmers who were not affected by the drought?

Total revenue would rise as quantity demanded falls by 25%.

Total revenue would rise as quantity demanded falls by 16%.

Total revenue would fall as quantity demanded falls by 25%.

Total revenue would fall as quantity demanded falls by 16%.

Answer 1