Exam Ch. 6 ECO

Marginal product is: A. the increase in total output attributable to the employment of one more worker B. the increase in total revenue attributable to the employment of one more worker C. the increase in total cost attributable to the employment of one more worker. D. total product divided by the number of workers employed.

A

Refer to the above diagram. At output level Q total variable cost is: A. 0BEQ B. BCDE C. 0CDQ D. 0AFQ

A

The law of diminishing returns indicates that: A. as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point. B. because of economies and diseconomies of scale, a competitive firm's long-run average total cost curve will be U-shaped C. the demand for goods produced by purely competitive industries is downsloping D. beyond some point, the extra utility derived from additional units of a product will yield the consumer smaller and smaller extra amounts of satisfaction

A

Which of the following is a short-run adjustment? A. a local bakery hires two additional bakers B. Six new firms enter the plastics industry C. The number of farms in the U.S declines by 5% D. BMW constructs a new assembly plant in South Carolina

A

Which of the following is most likely to be a variable cost? A. fuel and power payments B. interest on business loans C. Rental payments on IBM equipment D. Real estate taxes

A

A group of three plants that is owned and operated by a single firm and that consists of a farm growing whats, a flour-milling plants, and a plant that bakes and sells bread would best be an example of a: A. multiplant farm B. vertically integrated firm C. partnership D. conglomerate

B

In the above diagram curves 1, 2, and 3 represent the: A. average, marginal, and total product curves respectively B. marginal, average, and total product curves respectively C. total, average, and marginal product curves respectively D. total, marginal, and average product curves respectively.

B

Marginal cost is the: A. rate of change in total fixed cost that results from producing one more unit of output B. change in total cost that results from producing one more unit of output C. change in average variable cost that results from producing one more unit of output D. change in average total cost that results from producing one more unit of output

B

Refer to the above data. When two workers are employed: A. total product is 20 B. total product is 18 C. average product is 10 D. total product cannot be determined from the information given

B

Suppose you own $50,000 of personal property, $5,000 of stock in General Statics Corporation, a $10,000 savings account, and $20,000 of government bonds. If General Statics goes bankrupt, the most you could lose is: A. $50,000 B. $5,000 C. $35,000 D. $85,000

B

The most effective form of business organization for raising money to finance the expansion of its facilities and capabilities is a: A. partnership B. corporation C. conglomerate D. sole proprietorship

B

The principal-agent problem in corporations arises from: A. the fact that the principal objective of most corporations is to make profits and not to contribute to charity B. a conflict of interest between corporate executives who manage the firm and stockholders who won the firm C. the view that workers are agents who are not considered to be the principal asset of the corporations for which they work D. a perspective that corporations are agents that represent the principal source of power for government and the national economy

B

To economists, the main difference between the short run and the long run is that: A. the law of diminishing returns applies in the long run, but not in the short run B. in the long run all resources are variable, while in the short run at least one resource is fixed. C. fixed costs are more important to decision making in the long run than the short run D. in the short run all resources are fixed, while in the long run all resources are variable

B

Which of the following is the correct? A. A person who purchases a corporate bond is borrowing money from a corporation B. A person who purchases a corporate stock is buying ownership in the corporation C. A person who purchases a corporate bond is guaranteed to earn dividends from the stock D. A person who purchases a corporate stock gets the option to buy other shares at lower prices

B

Which of the following represents a long-run adjustment? A. A farmer uses an extra dose of fertilizer on his corn crop B. Unable to meet foreign competition, a U.S watch manufacturer sells one of its branch plants C. A steel manufacturer cuts back on its purchases of coke and iron ore. D. A supermarket hires four additional clerks

B

A Macy's or JCPenny store is an exampleof: A. a conglomerate B. a vertically integrated firm C. a multiplant firm D. an industry

C

Refer to the above data. Diminishing marginal returns becomes evident with the addition of the: A. sixth worker B. fourth worker C. third worker D. second worker

C

Refer to the above data. The marginal product of the sixth worker is: A. 180 units of output B. 30 units of output C. 15 units of output D. negative

C

A person receives a paper asset from a corporation that is a promise from the corporation to repay a loan at a fixed rate of interest. This type of asset is referred to as a: A. bank loan B. share C. stock D. bond

D

Accounting profits are typically: A. greater than economic profits because the former do not take explicit costs into account B. equal to economic profits because accounting costs include all opportunity costs C. smaller than economic profits because the former do not take implicit costs into account D. greater than economic profits because the former do not take implicit costs into account

D

Implicit and explicit costs are different in that: A. explicit costs are relevant only in the short run B. implicit costs are relevant only in the short run C. the latter refer to non-expenditure and the former to out-of-pocket costs D. the former refer to non-expenditure costs and the latter to out-of-pocket costs

D

In the above diagram the range of diminishing marginal returns is: a. 0Q3 B.0Q2 C. Q1 Q2 D. Q1 Q3

D

Suppose that you could prepare your own tax return in 15 hours, or you could hire a tax specialist to prepare it for you in 2 hours. You value your time at 11.00 an hour. The tax specialist will charge you $55 an hour. The opportunity cost of preparing your own tax return is: A. $40 B. $55 C. $110 D. $165

D