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University of British Columbia
ECON 101
Ratna Shrestha

UBC Department of EconomicsPrinciples of Microeconomics Review Questions Set4 Ch 1315 and 17 Chapter 13 1 easy Your aunt is thinking about opening a hardware storeShe estimates that it would cost500000year to rent the location and buy the stockIn addition she would have to quit her 50 000year job as an accountantWhat is your aunts opportunity cost of running a hardware store per yearIf she thought she could sell510000 worth of merchandise in a year should she open the store 2 moderate A commercial fisher notices the following relationship Hours Quantity of Fish in Kg 0 0110218324428530a What is the MP of each hour spent fishing b Draw the fishers production function and explain your result c The fisher has a fixed cost of 10The opportunity cost of fishers time is 5hrDraw the fishers total cost curve 3 easy Bobs lawnmowing service is a profit maximizing competitive firmHis mows lawns for27 eachHis total cost each day is 280 of which 30 is a fixed cost He mows 10 lawns a dayWhat can you say about his shortrun decision regarding shut down and long run decision on exit4 You are thinking about setting up a lemonade stand The stand itself costs 200 The ingredients for each cup of lemonade cost 050a What is your fixed cost of doing business b Construct a table showing your total cost average total cost and marginal cost for output levels varying from 0 to 45 L HINT There are 4 cups in a litre Draw the three cost curves 5 A firm in a competitive market receives 500 in total revenue and has marginal revenue of 10 What is the average revenue and how many units were sold
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