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: