The term shutdown   and the term exit both refer to long-run decisions that a firm might make refers to a short-run decision that a firm might make, whereas the term exit refers to a long-run decision that a firm might make refers to a long-run decision that a firm might make, whereas the term exit refers to a short-run decision that a firm might make and the term exit both refer to short-run decisions that a firm might make  

An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc. How much profit will the airline earn if it engages in price discrimination by charging each person their maximum willingness to pay?  $5,000 $40,000  $45,000 $55,000

A monopolist will always choose to produce the quantity where 1. MR = MC 2. MR = ATC 3. MC = ATC 4. MC = Price

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that marginal cost of the third worker hired is $40, and the average total cost when three workers are hired is $50. What is the total cost of production when three workers are hired?   1.  $50   2.  $90   3.  $120   4.   $150

Which of the following is a characteristic of a monopoly? low fixed costs as a portion of total costs free entry and exit barriers to entry declining marginal cost

A firm produces 400 units of output at a total cost of $1,200. If fixed costs are $200,   1.  average fixed cost is $2.   2.  average variable cost is $2.50.   3.  average total cost is $4.   4.  average total cost is $5.

In the wine industry 1. the price of a cheap wine and expensive wine are not that different 2. even experts have a difficult time telling the difference between cheap and expensive wine 3. it is very easy to tell different types apart 4. there are only a few wines that control the market

A free-rider problem exists for any good that is not   a private good free excludable rival in consumption

Which of the following is a characteristic of a competitive market?   Many firms have market power because they own patents Buyers and sellers are price takers . Firms sell differentiated products There are many buyers but few sellers

Sequence 2 – This question is worth 16 points.