ECON-B 251 Exam #3 Study Guide
Questions with Actual Detailed
Answers 2025-2026 Updated.
21,000 - Answer Sue quit her $40,000 per year job and opened a coffee shop that she calls Top
Brew. In the first year, Top Brew earned $200,000 in revenue. For the same year, Top Brew paid
$80,000 to employees in wages, spent $40,000 on ingredients such as coffee beans, $15,000
rent for the building to house Top Brew. Sue also used $50,000 of her personal savings to
purchase equipment for Top Brew, which she was earning $4,000 in interest each year.
Assuming no depreciation in the value of the equipment, Sue's economic profit from Top Brew
for the year is $___.
The owner's time
Interest forgone
Depreciation - Answer Which of the following are examples of implicit opportunity costs for
the firm?
Choose all that apply.
symmetric - Answer Having equal amount of information is known as _____ information.
principals and agents are more likely to have the same goals if the agent's pay is tied to
satisfying the principal's goals - Answer The principal-agent problem suggests
many, many, identical, Buyers and sellers, neither buyers nor sellers - Answer In a perfectly
competitive market there are _____ buyers, _____ sellers producing _____ products. _____
have full information and _____ have market power.
the quantity used of at least one factor of production is fixed - Answer The short run is a
period of time in which
5 - Answer The above table shows the total product of producing pizzas. The marginal product
of the 4th worker is equal to ___ pizzas.
fourth - Answer The above table shows the total product of producing pizzas. Diminishing
returns begins when the pizzeria hires the _____ worker.
, 2.50 - Answer Patti's Pizza production function is shown in the above table. Patti rents three
ovens for $30 a day each and hires workers at a wage rate of $20 a day. If Patti increases her
production of pizzas from 10 to 18 pizzas per day, then her marginal cost is $___.
marginal, decreasing - Answer As output increases increasing if marginal product is increasing,
then _____ cost is _____.
its long-run average cost curve - Answer When a firm is producing a given output at the least
possible cost, it is producing on
The market demand curve is downward sloping
There are no barriers to entry or exit
Many sellers - Answer Which of the following are characteristics of perfect competition?
Choose all that apply.
a perfect substitute for corn from other farms - Answer The demand for corn from Hoosier
farms is perfectly elastic because corn from Hoosier farms is
price = marginal cost - Answer The profit maximizing level of output for the perfectly
competitive firm occurs where
3 - Answer The above table shows the total cost of producing pizzas. The market for pizzas is
perfectly competitive. The equilibrium market price of a pizzas is $18.00. Given this information,
the profit maximizing output is ___ pizzas.
4, 84, 70, 14 - Answer The above table shows the total cost of producing pizzas. The market for
pizzas is perfectly competitive. The equilibrium market price of a pizzas is $21. Given this
information, the profit maximizing output is ___ pizzas, total revenue is $___, total cost is $___,
and the firm's economic profit is $___.
17, 16 - Answer Consider the perfectly competitive firm in the above figure. The firm's profit
maximizing level of output is ___ units at a price of $___.
272, 391, -119 - Answer Consider the perfectly competitive firm in the above figure. At the
Questions with Actual Detailed
Answers 2025-2026 Updated.
21,000 - Answer Sue quit her $40,000 per year job and opened a coffee shop that she calls Top
Brew. In the first year, Top Brew earned $200,000 in revenue. For the same year, Top Brew paid
$80,000 to employees in wages, spent $40,000 on ingredients such as coffee beans, $15,000
rent for the building to house Top Brew. Sue also used $50,000 of her personal savings to
purchase equipment for Top Brew, which she was earning $4,000 in interest each year.
Assuming no depreciation in the value of the equipment, Sue's economic profit from Top Brew
for the year is $___.
The owner's time
Interest forgone
Depreciation - Answer Which of the following are examples of implicit opportunity costs for
the firm?
Choose all that apply.
symmetric - Answer Having equal amount of information is known as _____ information.
principals and agents are more likely to have the same goals if the agent's pay is tied to
satisfying the principal's goals - Answer The principal-agent problem suggests
many, many, identical, Buyers and sellers, neither buyers nor sellers - Answer In a perfectly
competitive market there are _____ buyers, _____ sellers producing _____ products. _____
have full information and _____ have market power.
the quantity used of at least one factor of production is fixed - Answer The short run is a
period of time in which
5 - Answer The above table shows the total product of producing pizzas. The marginal product
of the 4th worker is equal to ___ pizzas.
fourth - Answer The above table shows the total product of producing pizzas. Diminishing
returns begins when the pizzeria hires the _____ worker.
, 2.50 - Answer Patti's Pizza production function is shown in the above table. Patti rents three
ovens for $30 a day each and hires workers at a wage rate of $20 a day. If Patti increases her
production of pizzas from 10 to 18 pizzas per day, then her marginal cost is $___.
marginal, decreasing - Answer As output increases increasing if marginal product is increasing,
then _____ cost is _____.
its long-run average cost curve - Answer When a firm is producing a given output at the least
possible cost, it is producing on
The market demand curve is downward sloping
There are no barriers to entry or exit
Many sellers - Answer Which of the following are characteristics of perfect competition?
Choose all that apply.
a perfect substitute for corn from other farms - Answer The demand for corn from Hoosier
farms is perfectly elastic because corn from Hoosier farms is
price = marginal cost - Answer The profit maximizing level of output for the perfectly
competitive firm occurs where
3 - Answer The above table shows the total cost of producing pizzas. The market for pizzas is
perfectly competitive. The equilibrium market price of a pizzas is $18.00. Given this information,
the profit maximizing output is ___ pizzas.
4, 84, 70, 14 - Answer The above table shows the total cost of producing pizzas. The market for
pizzas is perfectly competitive. The equilibrium market price of a pizzas is $21. Given this
information, the profit maximizing output is ___ pizzas, total revenue is $___, total cost is $___,
and the firm's economic profit is $___.
17, 16 - Answer Consider the perfectly competitive firm in the above figure. The firm's profit
maximizing level of output is ___ units at a price of $___.
272, 391, -119 - Answer Consider the perfectly competitive firm in the above figure. At the
