ECON 2302 Test 2

Based on the information in the table, when two workers are employed: A. Total product is 20 B. Average product is 10 C. Total product is 18 D. Total product cannot be determined from the data given in the table

Total product cannot be determined from the data given in the table

A monopolistic firm has a sales schedule such that it can sell 10 prefabricated garages per week at $10,000 each, but if it restricts its output to 9 per week it can sell these at $11,000 each. The marginal revenue of the 10th unit of sales per week is: A. - $1,000 B. $9,000 C. $10,000 D. $1,000

$1,000

The following is cost information for the Creamy Crisp Donut Co.: Entrepreneur's potential earnings as a salaried worker = $50,000 Annual building lease = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneurs' talent in the next best business activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Creamy Crisp's implicit costs, including a normal profit, are: A. $136,000 B. $150,000 C. $94,000 D. $156,000

$136,000

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: A. $100,000 and its economic profits were $0 B. $200,000 and its economic profits were $0 C. $100,000 and its economic profits were $100,000 D. $0 and its economic loss was $200,000

$200,000 and its economic profits were $0

Using the table above, what is the value for "W?" A. 20 B. 30 C. 40 D. 45

20

The first Pepsi yields Craig 18 units of utility and the second yields him an additional 12 units of utility. His total utility from three Pepsis is 38 units of utility. The marginal utility of the third Pepsi is: A. 26 units of utility B. 6 units of utility C. 8 units of utility D. 38 units of utility

8 units of utility

Referring to the diagram, to maximize profits or minimize losses, this monoplistic firm should produce A. E units and charge price C B. L units and charge price LK C. M units and charge price N D. E units and charge price A

E units and charge price A

The primary force encouraging the entry of new firms into a purely competitive industry is: A. Normal profits earned by firms already in the industry B. Government subsidies for start-up companies C. Economic profits earned by firms already in the industry D. A desire to provide goods for the betterment of society

Economic profits earned by firms already in the industry

For a purely competitive firm, total revenue: A. Is equal to price times quantity B. Increases by a constant absolute amount as output expands C. Graphs as a straight upward sloping line from the origin D. Has all of these characteristics

Has all of these characteristics

Referring to the diagram, Demand is relatively elastic: A. In the P2P1 price range B. In the 0P1 price range C. In the P2P4 price range D. On price P2

In the P2P4 price range

In the accompanying diagram, if price is reduced from P1 to P2, total revenue will: A. Increase by A - C B. Increase by C - A C. Decrease by A - C D. Decrease by C - A

Increase by C - A

Which of the following statements applies to a purely competitive producer? A. It will not advertise its product B. In long-run equilibrium, it will earn an economic profit C. Its product will have a brand name that elicits customer loyalty D. Its product is slightly different from those of its competitors

It will not advertise its product

Which of the following statements is correct? A. Average total cost is the difference between average variable cost and average fixed cost B. Marginal cost measures the cost per unit of output associated with any level of production C. When marginal product rises, marginal cost must also rise D. Marginal cost is the price or cost of an extra variable input (e.g., an extra worker of machine) divided by its marginal product

Marginal cost is the price or cost of an extra variable input (e.g., an extra worker of machine) divided by its marginal product

To maximize utility, a consumer should allocate money income so that the: A. Elasticity of demand on all products is the same B. Total utility derived from each product consumed is the same C. Marginal utility obtained from the last dollar spent on each product is the same D. Marginal utility of the last unit of each product consumed is the same

Marginal utility obtained from the last dollar spent on each product is the same

Referring to this diagram, at output level Q, total variable cost is equal to: A. BCDE B. OCDQ C. OAFQ D. OBEQ

OBEQ

A pure monopolist may obtain economic profits in the long run because: A. Of advertising B. Marginal revenue is constant as sales increase C. Of rising average fixed costs D. Of barriers to entry

Of barriers to entry

The demand schedule or curve confronted by the individual, purely competitive firm is: A. Relatively elastic, i.e., the coefficient of elasticity is greater than unity B. Perfectly elastic C. Relatively inelastic, i.e., less than 1 D. Perfectly inelastic

Perfectly elastic

What do economies of scale, the ownership of essential raw materials, and patents have in common? A. They must all be present before price discrimination can be practiced B. They all help explain why a monopolist's demand curve and marginal revenue curves coincide C. The are all barriers to entry D. They all help explain why the long-run average cost curve is U-shaped

The are all barriers to entry

The law of diminishing marginal utility states that: A. Total utility is maximized when consumers obtain the same amount of utility per unit of each product consumed B. Beyond some point, additional units of a product will yield less and less extra satisfaction to a consumer C. Price must be lowered to induce firms to supply more of a product D. It will take larger and larger amounts of resources beyond some point to produce successive units of a product

Total utility is maximized when consumers obtain the same amount of utility per unit of each product consumed

Which of the following constitutes an implicit cost to the Johnson Company? A. Payments of wages and salaries to its workers B. Economic profits resulting from current production C. Rent paid for the use of equipment owned by the Schultz Machine Co, D. Use of savings to pay operating expenses instead of generating interest income

Use of savings to pay operating expenses instead of generating interest income