ECON-B 251 Exam #3 Study Guide with
Complete Solutions
10 - ANSWER-The table above shows the demand for a monopolist's output. The
marginal revenue of increasing production from 2 to 3 units 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 $___.
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 $___.
20, 30 - ANSWER-The figure above shows the cost, demand, and marginal revenue
curves for a monopoly. The firm's profit maximizing level of output is ___ units at a price
of $___.
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 $___.
272, 391, -119 - ANSWER-Consider the perfectly competitive firm in the above figure.
At the profit maximizing level of output, the firm's total revenue is $___, total cost is
$___, and economic profit is ___.
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.
3, 3 - ANSWER-The table above shows the payoff matrix for a prisoners' dilemma
game. When both players behave in their own self-interest, the outcome is Player A
receives ___ years in jail and Player B receives ___ years in jail.
4, 12, 48 - ANSWER-The table above shows the demand for a monopolist's output. If
the pizzeria is a single-price monopoly and the marginal cost of a pizza is $6, then the
firm's profit maximizing output is ___ pizzas. At that amount the firm charges a price of
$___ and its total revenue is $___.
Complete Solutions
10 - ANSWER-The table above shows the demand for a monopolist's output. The
marginal revenue of increasing production from 2 to 3 units 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 $___.
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 $___.
20, 30 - ANSWER-The figure above shows the cost, demand, and marginal revenue
curves for a monopoly. The firm's profit maximizing level of output is ___ units at a price
of $___.
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 $___.
272, 391, -119 - ANSWER-Consider the perfectly competitive firm in the above figure.
At the profit maximizing level of output, the firm's total revenue is $___, total cost is
$___, and economic profit is ___.
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.
3, 3 - ANSWER-The table above shows the payoff matrix for a prisoners' dilemma
game. When both players behave in their own self-interest, the outcome is Player A
receives ___ years in jail and Player B receives ___ years in jail.
4, 12, 48 - ANSWER-The table above shows the demand for a monopolist's output. If
the pizzeria is a single-price monopoly and the marginal cost of a pizza is $6, then the
firm's profit maximizing output is ___ pizzas. At that amount the firm charges a price of
$___ and its total revenue is $___.
