1. For a linear cost structure given by TC = 10,000 + 25q, marginal cost will be given by:
2. 10,000
3. 25/q
4. 25
5. (10,000 + 25q) / q

An automobile manufacturer dedicates one of its factories to making sport utility vehicles (SUVs). The factory generates an annual revenue of $600 million. The auto manufacturer reports having actual costs of $350 million for its labor, capital, and materials at the factory. It also estimates that the factory could generate a profit of $200 million if it were dedicated to cars instead of SUVs. Given this information, should the auto manufacturer continue to use the factory for SUVs?

Yes, because the accounting profit is positive with SUVs.

Yes, because the economics profit is positive with SUVs.

No, because the accounting profit is negative with SUVs.

No, because the economic profit is positive with SUVs

Use the following information for the next 5 questions. Consider a market for a chemical product. There are many firms in the market and each produces the exact same chemical. There are no barriers to entry. What type of market structure is best depicted by this market?

What would we expect to be the consumer surplus in the market?

$0

$5,512.50

$22,050

$44,100