Q 13

Two firms constitute the entire doghouse industry. One has a long-run cost curve of 3 + 4 and the other has a long-run cost curve of 10 + . If no new firms enter the industry, at which of the following prices will exactly one firm operate?
A) $1
B) $3
C) $5
D) $7
E) None of the above.

Q 14

On a small island, papayas can only be sold in the market in the center of the island. Although papayas only cost $1 to raise, they can be sold in the market for $3. But it costs $.10 per kilometer to transport each papaya to market. If an acre of land grows 200 papayas, how much rent does an acre of land 4 kilometers from the market command?
A) $302
B) $320
C) $240
D) $262
E) None of the above.

Q 15

On a tropical island there are 100 potential boat builders, numbered 1 through 100. Each can build up to20 boats a year, but anyone who goes into the boatbuilding business has to pay a fixed cost of $19.Marginal costs differ from person to person. Where y denotes the number of boats built per year, boat builder 1 has a total cost function c(y) = 19 + y. Boat builder 2 has a total cost function c(y) = 19 + 2y, and more generally, for each i, from 1 to 100, boat builder i has a cost function c(y) = 19 + iy. If the price of boats is 25,how many boats will be built per year?
A) 480
B) 120
C) 60
D) 720
E) Any number between 500 and 520 is possible.