Suppose that you have returned from your fishing expedition with 20,000 fish. The market price is 3 per fish. Your average fixed cost was 1 and your total variable cost was 5,000 . If the price jumps to 3.50 before you sell your first fish, how much extra profit, if any, do you earn?
a. c and d.
b. Extra profit is zero.
c. Extra profit is enough to cover half of the fixed cost of your next trip.
d. Extra profit is enough to cover all of the variable costs of your next two trips.
e. Extra profit is 45,000.
QUESTION 2In the very short-run period,
a. the price elasticity of supply is very elastic.
b. the price elasticity of demand is very elastic.
c. the cross elasticity of demand is very inelastic.
d. income elasticity is very elastic.
e. the price elasticity of supply is very inelastic.
QUESTION 3A fishing boat owner brings 50,000 fish to market and the market price is 4 per fish. Her average variable cost of 50,000 fish is 1 and the fixed cost of the boat is 100,000 . What is her profit per fish?
a. 1.
b. 500.
c. 5,000.
d. 25,000.
e. 500,000.
QUESTION 4A perfectly elastic supply curve is expressed graphically as a(n):
a. downward sloping line or curve. b. upward sloping line or curve.
c. vertical line. d. horizontal line.
QUESTION 5If a fishing boat owner brings 10,000 fish to market and the market price is 7 per fish, she will have 70,000 in total revenue. If the average variable cost of 10,000 fish is 4 and the fixed cost of the boat is 20,000 . what is her profit?
a. 1.
b. 3.
c. 1,000.
d. 3,000.
e. 10,000.
QUESTION 6If the price elasticity is supply coefficient is greater than one, then supply is:
a. elastic.
b. inelastic.
c. perfectly elastic.
d. perfectly inelastic.
QUESTION 7Total profit can be calculated by:
a. c and e.
b. subtracting total revenue from total costs.
c. subtracting total costs from total revenue.
d. finding the product of the difference between average profit and average total cost and the quantity produced.
e. quantity produced times the difference between average revenue and average total cost.
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