SOLVED

1) Ms. Lollipop opened a candy store in December 2010. She rented a building for $25,000 a year and used $30,000 from her savings account, which earned an annual interest rate of 5 percent, to buy capital equipment. In December 2011, the market value of her capital equipment was $26,000. What is the economic depreciation of Lollipop’s capital? A) $3,000 B) $4,000 C) $1,000 D) $25,000 2) Ms. Lollipop opened a candy store in December 2010. She rented a building for $25,000 a year and used $30,000 from her savings account, which earned an annual interest rate of 5 percent, to buy capital equipment. During the first year of operation, Lollipop paid $28,000 to her employees, $10,000 for utilities, and $16,000 for goods she bought from other firms. In December 2011, the market value of Lollipop’s capital equipment was $26,000. Lollipop’s best alternative to running her candy store is to work as a sales clerk at Winn-Dixie for $15,000 a year. What is Lollipop’s total opportunity cost? A) $99,500 B) $94,000 C) $79,000 D) $20,500 3) Ms. Lollipop opened a candy store in December 2010. She rented a building for $25,000 a year and used $30,000 from her savings account, which earned an annual interest rate of 5 percent, to buy capital equipment. During the first year of operation, Lollipop paid $28,000 to her employees, $10,000 for utilities, and $16,000 for goods she bought from other firms. In December 2011, the market value of Lollipop’s capital equipment was $26,000. Lollipop’s best alternative to running her candy store is to work as a sales clerk at Winn-Dixie for $15,000 a year. What is Lollipop’s economic profit? A) $21,000 B) $500 C) $5,000 D) -$9,000 Labor (workers) Total product (units per week) 0 0 1 40 2 100 3 140 4 170 5 190 6 200 4) In the table above, what is the marginal product of the 5th worker? A) 190 units per week B) 4 units per week C) 20 units per week D) 38 units per week 5) Given the information in the table above, suppose labor is the only variable input. The price of labor is $400 per week and total fixed costs are $1,000 per week. What is the total cost of producing 100 units? A) $1,700 B) $1,800 C) $1,900 D) $2,000 6) Given the information in the table above, suppose labor is the only variable input. The price of labor is $400 per week and total fixed costs are $1,000 per week. If 170 units are produced, the average total cost is A) $15.29. B) $5.88. C) $9.41. D) $7.99 7) Given the information in the table above, suppose labor is the only variable input. The price of labor is $400 per week and total fixed costs are $1,000 per week. What is the marginal cost of producing the 120th unit? A) $400.00 B) $40.00 C) $20.00 D) $10.00 8) Given the information in the table above, suppose labor is the only variable input. The price of labor is $400 per week and total fixed costs are $1,000 per week. If the firm wants to minimize its average total cost, it should produce A) 100 units. B) 140 units. C) 170 units. D) 190 units. 9) The profit maximizing condition for any competitive firm is A) MR = P. B) MC = MR. C) P = ATC. D) None of the above answers is correct because each type of competitive firm has a different condition of maximizing its profit. 10) Firms in which of the following industries can incur an economic loss in the short run?             A) any firm can incur an economic loss profit in the short run B) only perfect competition and monopolistic competition C) only monopolistic competition D