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The following table displays some information about a
firm’s costs of production. Please fill in the missing columns with
the correct values.

Number of Workers

Quantity

MPL

Total Cost

Fixed Costs

Variable Costs

Avg. Total Cost

Avg. Fixed Cost

Avg. Variable Cost

Marginal Cost

0

0

$2,000

$2,000

$0

$0

$0

$0

1

30

$2,200

$2,000

$200

2

42

$2,400

$2,000

$400

3

52

$2,600

$2,000

$600

4

60

$2,800

$2,000

$800

5

67

$3,000

$2,000

$1,000

6

73

$3,200

$2,000

$1,200

7

79

$3,400

$2,000

$1,400

If the firm from question 1 is able to sell its product
for $30, how many workers should it hire?

3

4

5

6

When the marginal productivity of workers declines as
more workers are added, this is known as __________.

Inefficiency

Diminishing marginal product

Increasing returns to scale

Profitability

Does the firm in question 1 face diminishing marginal
productivity of labor?

Yes

No

Returns to scale is a concept that describes the
relationship between quantity of output and average total cost.
Which type of returns to scale does the firm in Question 1 face
over the range covered in the table?

Diseconomies of scale

Constant returns to scale

Economies of scale

The next questions concern a single firm in a
competitive market. The firms cost and demand curves are shown in
the following graph.

Question: The following table displays some information about afirm’s costs of production. Please fill in ...

What is the equilibrium quantity that this firm will
produce?

38

50

70

29

What is the market price?

60

75

100

105

Is the firm making profits in this example?

Yes

No

What are the firms short-run profits as shown by the
graph?

$0

$15

$750

-$750

If this is a competitive market, what will happen in
this market in the long-run?

Firms will enter the market and drive profits to
zero.

Firms will leave the market and raise profits to
zero.

Nothing will happen

The next questions concern a single firm in a
monopolistic market. The firms cost and demand curves are shown in
the following graph.

Question: The following table displays some information about afirm’s costs of production. Please fill in ...

What is the equilibrium quantity produced by this
monopoly firm?

30

40

50

60

What is the price that is charged by this
monopoly?

$45

$60

$75

$90

How does this price compare to the price that would be
charged in a competitive market?

It is lower

It is the same

It is higher

How does the quantity compare to the equilibrium
quantity in a competitive market?

It is lower

It is the same

It is higher

Is the firm making profits?

Yes

No

What are the profits of this firm?

$0

$45

$1800

-$1800

Show transcribed image text Pric 160 140 100 60 40 20 A Single Firm in a Competitive Market Quantity 40 60 20 100 Demand MC ATC

Pric 160 140 100 60 40 20 A Single Firm in a Competitive Market Quantity 40 60 20 100 Demand MC ATC