Economics Exam 2

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1.
1 point
Answer the question on the basis of the following cost data for a purely competitive seller:

Output--Total Cost
0--50
1--90
2--120
3--140
4--170
5--210
6--260
7--330

If product price is $45, the firm will: 
2.
1 point
Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year. If the firm sold 4,000 units of its output at $300 per unit, its accounting profits were: 
3.
1 point
 In answering the question, assume a graph in which dollars are measured on the vertical axis and output on the horizontal axis. For a purely competitive firm, marginal revenue graphs as a: 
4.
1 point
TFC = Total Fixed Cost
MC = Marginal Cost
TVC = Total Variable Cost
Q = Quantity of Output
P = Product Price

Average fixed cost is: 

5.
1 point
If a purely competitive firm shuts down in the short run: 
6.
1 point
For most producing firms: 
7.
1 point
What do wages paid to factory workers, interest paid on a bank loan, forgone interest, and the purchase of component parts have in common? 
8.
1 point
A purely competitive seller is: 
9.
1 point
In the short run, a purely competitive firm will earn a normal profit when: 
10.
1 point
Which of the following is correct? 
11.
1 point
Firms seek to maximize: 
12.
1 point
In the short run a purely competitive firm that seeks to maximize profit will produce: 
13.
1 point
Use the following data to answer the question. The letters A, B, and C designate three successively larger plant sizes.

Output--ATC-A--ATC-B--ATC-C
10--$6--$13--$44
20--5--9--35
30--4--6--27
40--5--4--20
50--7--3--14
60--10--4--11
70--14--5--8
80--19--7--6
90--25--10--5--
100--32--16--7

At what level of output is minimum efficient scale realized? 
14.
1 point
An unprofitable motel will stay open in the short-run if: 
15.
1 point
Answer the question on the basis of the following output data for a firm.

Number of Workers/Units of Output
0/0
1/40
2/90
3/126
4/150
5/165
6/180

Assume that the amounts of all non-labor resources are fixed.Average product is at a maximum when: 
 
16.
1 point
Suppose that at 500 units of output marginal revenue is equal to marginal cost. The firm is selling its output at $5 per unit and average total cost at 500 units of output is $6. On the basis of this information we: 
17.
1 point
If you owned a small farm, which of the following would most likely be a fixed cost? 
18.
1 point
Diseconomies of scale arise primarily because: 
19.
1 point
If a purely competitive firm is producing at some level less than the profit-maximizing output, then: 
20.
1 point
TFC = Total Fixed Cost
MC = Marginal Cost
TVC = Total Variable Cost
Q = Quantity of Output
P = Product Price

Marginal Cost is:
21.
1 point
Which of the following is most likely to be a fixed cost? 
22.
1 point
Economies of scale are indicated by: 
23.
1 point
Answer the question on the basis of the following cost data for a purely competitive seller:

Total Output--Total Fixed Cost--Total Variable Cost--Total Cost
0--50--0--50
1--50--70--120
2--50--120--170
3--50--150--200
4--50--220--270
5--50--300-350
6--50--390--440

At 5 units of output average fixed cost, average variable cost, and average total cost are: 
24.
1 point
To economists, the main difference between the short run and the long run is that: 
25.
1 point
Use the following data to answer the question:

Inputs of Labor/Total Product
0/0
1/8
2/18
3/25
4/30
5/33
6/34
7/32

Marginal product becomes negative with the hiring of the __________ unit of labor. 
26.
1 point
 Which of the following best expresses the law of diminishing returns? 
27.
1 point
If at the MC = MR output, AVC exceeds price: 
28.
1 point
The short-run supply curve for a purely competitive industry can be found by: 
29.
1 point
A firm finds that at its MR = MC output, its TC = $1,000, TVC = $800, TFC = $200, and total revenue is $900. This firm should: 
30.
1 point
 If marginal cost is: 
31.
1 point
If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue: 
32.
1 point
A purely competitive seller should produce (rather than shut down) in the short run: 
33.
1 point
If a variable input is added to some fixed input, beyond some point the resulting extra output will decline. This statement describes: 
34.
1 point
Which of the following is not a valid generalization concerning the relationship between price and costs for a purely competitive seller in the short run? 
35.
1 point
Answer the question on the basis of the accompanying table that shows average total costs (ATC) for a manufacturing firm whose total fixed costs are $10:

Output/ATC
1/40
2/27
3/29
4/31
5/38

The total cost of producing 4 units of output is: 
36.
1 point
Which of the following is not correct? 
37.
1 point
Assume a purely competitive firm is selling 200 units of output at $3 each. At this output its total fixed cost is $100 and its total variable cost is $350. This firm: 
38.
1 point
Other things equal, if the prices of a firm's variable inputs were to fall: 
39.
1 point
Answer the question on the basis of the following data confronting a firm:

Output--Marginal Revenue--Marginal Cost
0--X--X
1--16--10
2--16--9
3--16--13
4--16--17
5--16--21

This firm is selling its output in a(n): 
40.
1 point
A natural monopoly exists when: 
41.
1 point
Price is constant or given to the individual firm selling in a purely competitive market because: 
42.
1 point
Use the following data to answer the question. The letters A, B, and C designate three successively larger plant sizes.

Output--ATC-A--ATC-B--ATC-C
10--$6--$13--$44
20--5--9--35
30--4--6--27
40--5--4--20
50--7--3--14
60--10--4--11
70--14--5--8
80--19--7--6
90--25--10--5--
100--32--16--7

In the long run the firm should use plant size "C" for: 
43.
1 point
Economists would describe the U.S. automobile industry as: 
44.
1 point
For a purely competitive firm total revenue: 
45.
1 point
A perfectly elastic demand curve implies that the firm: 
46.
1 point
Assume a firm closes down in the short run and produces no output. Under these conditions: 
47.
1 point
The following is cost information for the Creamy Crisp Donut Company:
Entrepreneur's potential earnings as a salaried worker = $50,000
Annual lease on building = $22,000
Annual revenue from operations = $380,000
Payments to workers = $120,000
Utilities (electricity, water, disposal) costs = $8,000
Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000
Entrepreneur's forgone interest on personal funds used to finance the business = $6,000
 
Refer to the above data. Creamy Crisp's accounting profit is: 
48.
1 point
An industry comprised of 40 firms, none of which has more than 3 percent of the total market for a differentiated product is an example of: 
49.
1 point
The following table applies to a purely competitive industry composed of 100 identical firms.

Q Demanded--Price--Q Supplied
400K--5--800K
500K--4--700K
600K--3--600K
700K--2--500K
800K--1--400K

If each of the 100 firms in the industry is maximizing its profit, each must have a marginal cost of: 
50.
1 point
 Introduction of the Verson Stamping Machine helped firms in the automobile industry: