ECON-B 251 EXAM #3 STUDY GUIDE WITH ALL ANSWERS
1. 21,000: 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 $ .
2. The owner's time
Interest forgone
Depreciation: Which of the following are examples of implicit opportunity costs for
the firm?
Choose all that apply.
3. symmetric: Having equal amount of information is known as information.
4. principals and agents are more likely to have the same goals if the agent's
pay is tied to satisfying the principal's goals: The principal-agent problem sug-
gests
5. many, many, identical, Buyers and sellers, neither buyers nor sellers: In a
perfectly competitive market there are buyers, sellers producing
products. have full information and have market power.
6. the quantity used of at least one factor of production is fixed: The short run
is a period of time in which
7. 5: The above table shows the total product of producing pizzas. The ma rginal
product of the 4th worker is equal to pizzas.
8. fourth: The above table shows the total product of producing pizzas. Di minishing
returns begins when the pizzeria hires the worker.
1/5
, ECON-B 251 EXAM #3 STUDY GUIDE WITH ALL ANSWERS
9. 8.33: Patti's Pizza production function is shown in the above table. Patti ren ts three
ovens for $30 a day each and hires workers at a wage rate of $20 a day. If Patti
produces 18 pizzas per day, then her average total cost is $ .
2/5
1. 21,000: 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 $ .
2. The owner's time
Interest forgone
Depreciation: Which of the following are examples of implicit opportunity costs for
the firm?
Choose all that apply.
3. symmetric: Having equal amount of information is known as information.
4. principals and agents are more likely to have the same goals if the agent's
pay is tied to satisfying the principal's goals: The principal-agent problem sug-
gests
5. many, many, identical, Buyers and sellers, neither buyers nor sellers: In a
perfectly competitive market there are buyers, sellers producing
products. have full information and have market power.
6. the quantity used of at least one factor of production is fixed: The short run
is a period of time in which
7. 5: The above table shows the total product of producing pizzas. The ma rginal
product of the 4th worker is equal to pizzas.
8. fourth: The above table shows the total product of producing pizzas. Di minishing
returns begins when the pizzeria hires the worker.
1/5
, ECON-B 251 EXAM #3 STUDY GUIDE WITH ALL ANSWERS
9. 8.33: Patti's Pizza production function is shown in the above table. Patti ren ts three
ovens for $30 a day each and hires workers at a wage rate of $20 a day. If Patti
produces 18 pizzas per day, then her average total cost is $ .
2/5
