Q: Suppose a firm in a perfectly competitive market faces a market price of $$P = 10$$, has total cost $$TC = 30 + 2Q$$, and sells $$Q = 20$$ units. What is the firm's profit?

$$\pi = 10 \times 20 - (30 + 2 \times 20) = 200 - 70 = 130$$

Question 1

Suppose the demand for coffee is given by $$Q_d = 100 - 2P$$ and the supply is $$Q_s = 20 + 3P. $$What is the equilibrium price in this market?

Accepted Answer

Question 2

Which of the following best describes a public good?

Accepted Answer

A good that is non-rival and non-excludable

Question 3

A market is in equilibrium when:

Accepted Answer

Quantity demanded equals quantity supplied

Question 4

If the market price is set below the equilibrium price, which of the following will occur?

Accepted Answer

A shortage will develop

Question 5

Which formula correctly calculates a firm's profit?

Accepted Answer

$$\pi = TR - TC$$

Question 6

A monopolist practicing first-degree price discrimination will:

Accepted Answer

Capture all consumer surplus as profit

Question 7

Suppose a firm in a perfectly competitive market faces a market price of $$P = 10$$, has total cost $$TC = 30 + 2Q$$, and sells $$Q = 20$$ units. What is the firm's profit?

Accepted Answer

$$\pi = 10 	imes 20 - (30 + 2 	imes 20) = 200 - 70 = 130$$

Question 8

Which of the following is NOT a characteristic of a perfectly competitive market?

Accepted Answer

Products are differentiated

Question 9

If a country can produce either 10 tons of wheat or 20 tons of corn with the same resources, what is the opportunity cost of producing 1 ton of wheat?

Accepted Answer

2 tons of corn

Question 10

A negative externality exists when:

Accepted Answer

The marginal social cost exceeds the marginal private cost

Question 11

Suppose the government imposes a tariff of $$\5$ per unit on an imported good. If 1,000 units are imported, what is the tariff revenue?

Accepted Answer

$$\5$$,000$

Question 12

Which of the following is an argument commonly made against free trade?

Accepted Answer

It can harm domestic industries

Question 13

Producer surplus in a market is best described as:

Accepted Answer

The area above the supply curve and below the market price

Question 14

A common resource, such as fish in the ocean, is:

Accepted Answer

Rival and non-excludable

Question 15

If the marginal cost of producing a good is $$MC = 8$$ and the marginal external cost is $$MEC = 2$$, what is the marginal social cost?

Accepted Answer

$$MSC = 10$$

Question 16

Which of the following is true about monopoly compared to perfect competition?

Accepted Answer

Monopoly creates deadweight loss due to reduced output

Question 17

If a country exports 500 units of a good and imports 200 units at the world price, what is the net export quantity?

Accepted Answer

300 units

Question 18

Which of the following is an example of a pecuniary externality?

Accepted Answer

A new technology lowering the market price for all consumers

Question 19

Suppose the area under the demand curve and above the market price for a good is a triangle with base 10 and height 5. What is the consumer surplus?

Accepted Answer

$$25$$

Question 20

A club good is characterized by:

Accepted Answer

Non-rivalry and excludability

Principles of Microeconomics: Final Exam Study Guide

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