Exam 2 Microeconomics

If at q units of output, AVC = $200, AFC = $10 and Total cost = $21,000, what must the level of output for the firm be? A.) 1 B.) 5 C.) 10 D.) 15 E.) None of these

E.) None of these

Marginal Costs are sloped upwards because the Marginal Productivity of Labor is Increasing.... True or False

False

Economic profit is less than accounting profit because... A.) Economic costs are greater than accounting costs as economic costs include opportunity cost B.) Accounting costs are greater than Economics costs as accounting costs include opportunity cost C.) Accounting costs are greater than Economic costs as economic cost do not include visible costs

A.) Economic costs are greater than accounting costs as economic costs include opportunity cost

If a firm produces a good using 10 workers on contract for 5 years and two machines on contract for 3 years, the long-run is defined as A.) More than 10 years B.) More than 5 years C.) Less than 5 years D.) Between 5 and 10 years

A.) More than 10 years

The assumption of perfect information means... A.) It is difficult for sellers to leave the market B.) All buyers know the prices of all sellers C.) The government knows the price of all sellers D.) A and B E.) B and C

B.) All buyers know the price of all sellers

If marginal cost is less than average total cost, average total cost will... A.) Be maximized B.) Decrease C.) Increase D.) Be minimized E.) Equal

B.) Decrease

I get more enjoyment out of the first piece of candy I eat than the last piece I eat because of... A.) Diminishing marginal cost B.) Diminishing marginal utility C.) Increasing total utility

B.) Diminishing marginal utility

Marginal Costs are sloped upwards because the Marginal Productivity of Labor is increasing A.) True B.) False

B.) False

For a perfectly competitive firm... A.) P = MC at all levels of output B.) P = MC at the profit-maximizing quantity only C.) P > MC at all output levels D.) P < MC at all the profit maximizing quantity only

B.) P = MC at the profit-maximizing quantity only

Perfectly competitive firms are price takers A.) True, this means their demand curves are positively sloped and equal to their marginal revenue curve B.) True, this means they must accept the market price and this sets their demand equal to their marginal revenue C.) False, goods are homogenous so the firm must accept the market price which is less than their marginal revenue

B.) True, this means they must accept the market price and this sets their demand equal to their marginal revenue

Which is the best example of a homogenous good? A.) Cars B.) Potato Chips C.) None of these are good examples D.) All of these are good examples

C.) None of these are good answers

If we consider ordinal utility, if Person A has utility of 3 for good X and Person B has utility 12 for good X we can say... A.) Person A likes X more than person B B.) Person B likes X twice as much as person A C.) Person B likes X more than Person A D) Person A likes X twice as more as person B

C.) Person B likes X more than Person A

assume dell computer company operates in a perfectly competitive market producing 5000 computers per day. at this output level, price below the firm's marginal cost. It follows that producing one more computer will cause the firm's... A.) Total cost to decrease B.) Profits to increase C.) Profits to decrease D.) Profits to remain unchanged

C.) Profits to decrease

Consider the graph for long run costs we do not have to include a graph for fixed costs as A.) It is the distance between the average variable cost curve and the average total cost curve B.) We ignore fixed costs in the long run C.) There are no fixed costs D.) All costs are fixed in the long run

C.) There are no fixed costs

In a world without prices and income we will consume until... A.) We are full B.) Our marginal utility is ) C.) Marginal utility is negative D.) A and B E.) None of the above

D.) A and B

A firm earning positive accounting profit will choose to operate... A.) True, they are covering all their visible costs and their opportunity cost B.) False, they are covering their opportunity costs but no visible cost C.) Uncertain, to operate a firm mist cover all its accounting cost plus the opportunity cost D.) True, accounting profits consider all relevant revenue costs

C.) Uncertain, to operate a firm mist cover all its accounting cost plus the opportunity cost

Assume an economic agent is following the rational spending rule and consuming Apples and Raspberries. Assume at the optimal bundle the price of apples is $1 the price of raspberries is $2 and the marginal utility of apples is 50, what is the marginal utility of raspberries? A.) 25 B.) 50 C.) 75 D.) 100

D.) 100

If total cost for 10 units is $120 and fixed costs are $10, what is Average Variable Cost? A.) $2 B.) $10 C.) $20 D.) $11

D.) $11

Marginal utility is the... A.) Average satisfaction obtained from consuming a good B.) Overall satisfaction obtained from consuming a good C.) The change in satisfaction obtained from consuming 1% more of a good D.) Additional satisfaction obtained from consuming one more unit of the good E.) Additional cost of one more unit of a good

D.) Additional satisfaction obtained from consuming one more unit of the good

What are marginal costs? A.) The additional quantity purchased given an additional dollar in variable costs B.) The additional quantity purchased given an additional dollar in fixed costs C.) The additional quantity purchased given an additional dollar in opportunity cost D.) None of these

D.) None of these

If a firm is able to change the amount of capital it employs, but it is unable to change the amount of labor due to union contracts the firm is making ________ decisions A.) Account cost B.) Long run C.) Economic cost D.) Short run E.) None of these

D.) Short run

A firm in a perfectly competitive market... A.) Can raise the price of its product and sell more output B.) Can lower the price of its product and sell more output C.) Can increase its supply to lower price D.) Can decrease its supply to raise the price E.) Accept the market price for its product

E.) Accept the market price for its product

Suppose a professor gives up her teaching job to devote her time to writing textbooks. If salaries of professors' fall A.) Her accounting profit will rise B.) Her accounting profit will fall C.) Her accounting profit will rise D.) Her economic profit from textbooks will fall E.) Her economic profit from textbooks will rise

E.) Her economic profit from textbooks will rise