MBADM 812 Exam 1

C

Assume that Good D is a normal good. The demand curve for Good D A) slopes upward B) usually slopes downward but could slope upward C) slopes downward D) usually slopes upward but could slope downward

Total revenue is less than total cost. Average revenue is less than average cost. Average revenue is greater than average cost. Marginal revenue is less than marginal cost. Correct Answer Marginal revenue is greater than marginal cost.

If current output is less than the profit-maximizing output, which must be true?

D

If the demand for a good declines with declining income, then the good is called a(n) A) regular good B) normal good C) luxury good D) inferior good

E

Import tariffs generally result in what? A) more producer surplus for domestic producers B) a deadweight loss C) higher domestic prices D) less consumer surplus E) All of the choices are correct.

the average product of labor is always greater that the marginal product of labor Correct Answer the average product of labor is always equal to the marginal product of labor the average product of labor is always less than the marginal product of labor as more labor is used, the average product of labor falls there is no unambiguous relationship between labor's marginal and average products.

In a certain textile firm, labor is the only short-term variable input. The manager notices that the marginal product of labor is the same for each unit of labor, which implies that

X all choices are correct which products to produce how much of a particular product to produce the best way to produce a given amount of output

Test starts here: Firms face trade-offs in production, including decisions related to

firms are assumed to maximize sales revenue managers are assumed to maximize the number of employees in their department X firms are assumed to maximize profits none of the above

The key assumption underlying the theory of the firm is that

D)

calculates the new revenue and sees that her revenue has increased after the increase in the price. In this case, which of the following is true about the elasticities of her product? A) Price elasticity of supply must be elastic at the original price. B) Price elasticity of supply must be inelastic at the original price. C) Price elasticity of demand must be elastic at the original price. D) Price elasticity of demand must be inelastic at the original price.

X +3.2% -3.2% +32.0% +0.32%

The price elasticity of the gasoline supply in the U.S. is 0.4. If the price of gasoline rises by 8%, what is the expected change in the quantity of gasoline supplied in the United States?

C

The slope of the total product curve measures which answer? A) slope of a line from the origin to the point B) marginal rate of technical substitution C) marginal product D) average product

200 220 240 X Correct Answer 260

The table below lists the short-run costs for One Guy's Pizza. If One Guy's can sell all the output they produce for $12 per unit, how much should One Guy's produce to maximize profits? Does One Guy's Pizza earn an economic profit in the short run? Q TFC TVC ATC AVC MC Profits(column headers)(these numbers in order of headers fall under) Q58 TFC100 TVC336.4 Q59 TFC100 TVC348.1 Q60 TFC100 TVC360 Q61 TFC100 TVC372.1 What is the maximum economic profit for One Guy's Pizza in the short run?

500 5Q 5 Correct Answer 5 + (200/Q) none of the above

The total cost (TC) of producing computer software programs (Q) is given as follows: TC = 200 + 5Q. What is the average total cost?

B

There are two techniques of egg production: free range (where hens roam around the farm) or factory (where hens are fed and watered in wire cages). The free range technique has a much more elastic supply curve than the factory technique. When the demand for eggs falls, which answer is correct? A) the production using both techniques falls by the same amount B) egg production using the factory technique falls less than with the free range technique C) the factory egg producers supply curve shifts rightward D) the free range egg producers supply curve shifts rightward E) egg production using the factory technique falls more than with the free range technique

Output increases by less than 25%. Output decreases by less than 25%. Output decreases by exactly 25%. Correct Answer Output decreases by more than 25%.

Many mining and mineral extraction processes tend to exhibit increasing returns to scale. Suppose copper mines have increasing returns, and the existing copper mines reduce their capital and labor inputs by 25% in response to a global recession. What is the expected impact on copper output?

6

A bakery operating in the short run has the following table for labor and total production (TP). Labor (L) Total Production (TP) 4 110 5 115 6 122 7 127 8 130 9 132 10 133 https://www.chegg.com/homework-help/questions-and-answers/1-bakery-operating-short-run-found-level-employment-baking-room-increased-4-10-increments--q68698663

X 75 100 125 50

A competitive firm sells its product at a price of $0.10 per unit. Its total and marginal cost functions are TC = 5 - 0.05Q + 0.001Q2 MC = -0.05 + 0.002Q where TC is total cost ($) and Q is output rate (units per time period). What is the output rate that maximizes profit?

D

A competitive market is a market in which? A) an auctioneer helps set prices and arrange sales B) there are only a few sellers C) the forces of supply and demand do not apply D) no individual buyer or seller has any significant impact on the market price

the firm's production function a curve that makes the marginal product of the last unit of each input equal for each output Correct Answer a curve that shows the least-cost combination of inputs needed to produce each level of output for given input prices none of the above

A firm's expansion path is

A

A newspaper has reported that the toll on the Golden Gate Bridge was raised from $4 to $6. Following the toll increase, traffic fell by 5%. Based on this information, what can you say about the price elasticity of demand for bridge crossing? A) price inelastic B) perfectly inelastic C) price elastic D) We cannot tell whether it is inelastic or elastic.

A

Economists assume that the typical person who starts their own business does so with the intention of A) maximizing profits capturing the highest number of sales in their industry minimizing profits donating the profits from their business to charity

For European consumers, the income elasticity of demand for fruit juice is 1.3. If the economy enters a recession next year and consumer income declines by 2.5%, what is the expected change in the quantity of fruit juice demanded next year? A) +3.25% B) +32.5% C) -32.5% X D) -3.25%

For European consumers, the income elasticity of demand for fruit juice is 1.3. If the economy enters a recession next year and consumer income declines by 2.5%, what is the expected change in the quantity of fruit juice demanded next year? A) +3.25% B) +32.5% C) -32.5% X D) -3.25%

Variable cost is 75 and marginal cost is 15. Variable cost is 60 and marginal cost is 20. Variable cost is 50 and marginal cost is 15. Correct Answer Variable cost is 25 and marginal cost is 15.

Given the information in the following table, what is the variable cost and marginal cost when output level is 2? Output Total Cost 0 50 1 60 2 75 3 100 4 150 5 225 6 400

lower equilibrium aluminum prices and either higher or lower quantities either higher or lower equilibrium aluminum prices and unambiguously lower quantities either higher or lower equilibrium aluminum prices and unambiguously higher quantities X higher equilibrium aluminum prices and either higher or lower quantities

In recent years, the world demand curve for aluminum started to shift leftward due to declining economic growth in emerging economies. Also, the costs of extracting the aluminum increased due to higher wages. As a result, we observed

X more elastic than in the short run less elastic than in the short run perfectly elastic perfectly inelastic

In the long run, new firms can enter an industry, and so the supply elasticity tends to be

E

In the long run, the definition of variable input may change. Which of the following inputs is considered a variable cost in the long run? A) expenditures for wages B) expenditures for research and development C) expenditures for raw materials D) expenditures for capital machinery and equipment All of the choices are correct.

average Correct Answer marginal fixed variable

Incremental cost is the same concept as ________ cost.

D

Jean owns a small coffee shop, and her production function is q = 4KL, where q is total output in cups per hour, K is the number of coffee machines (capital), and L is the number of employees hired per hour (labor). If Jean's capital is currently fixed at K = 3 machines, what is her short-run production function? A) q = 4K2 B) q = 4L2 C) q = 4L D) q = 12L

AP = 5 Correct Answer AP = 5K AP = 5L AP = 5K/L

Joe owns a coffee house and produces coffee drinks under the production function q = 5KL, where q is the number of cups generated per hour, K is the number of coffee machines (capital), and L is the number of employees hired per hour (labor). What is the average product of labor?

D

John left his previous job as a manager and started his own consulting business. He previously earned $100,000 per year, but he now pays himself $40,000 per year while he is building the new business. What is the opportunity cost (implicit cost) of the time he contributes to the new business? A) $60,000 per year B) $40,000 per year C) zero D) $100,000 per year

C

Mostly, economies of scope are present when? A) economies of scale are constant in the joint production of two products B) economies of scale are present in the production of two or more goods C) joint output is greater from a single firm producing two goods than could be achieved by two different firms each producing a single product (assuming equivalent production inputs in both situations) D) joint output is less from a single firm than could be achieved from two different firms each producing a single product (assuming equivalent production inputs in both situations)

C

On the supply side, an improvement in production technology will A) increase a firm's costs and decrease its supply B) decrease a firm's costs and decrease its supply C) decrease a firm's costs and increase its supply D) increase a firm's costs and increase its supply

Correct Answer $20 $25 $50 $60 indeterminate

Scenario The average total cost to produce 100 cookies is $0.25 per cookie. The marginal cost is constant at $0.10 for all cookies produced. Refer to the scenario. The total cost to produce 50 cookies is

fall by $200 fall by $300 X Correct Answer remain the same rise by $200 rise by $300

Refer to the figure. Suppose the market is currently in equilibrium. If the government establishes a price ceiling of $20, consumer surplus will

5,000 5,100 6,000 Correct Answer 6,100

Spacely Sprockets' short-run cost curve is �(�,�)=25�2�+15� where q is the number of Sprockets produced and K is the number of robot hours Spacely hires. Currently, Spacely hires 10 robot hours per period. The short-run marginal cost curve is ��(�,�)=50�� If Spacely receives $250 for every sprocket he produces, what is his profit at the profit-maximizing level?

B

Suppose a certain firm is able to produce 150 units of output per day when 15 workers are hired. The firm is able to produce 161 units of output per day when 16 workers are hired, holding other inputs fixed. The marginal product of the 16th worker is what? A) 16 units of output. B) 11 units of output. C) 161 units of output. D) 10 units of output.

A

Suppose a store manager miscalculates the MC of production so that the perceived MC curve is below the actual MC curve. What is the likely outcome from this error? A) The firm produces more than optimal quantity and earns higher profits. B) The firm produces less than optimal quantity and earns higher profits. C) The firm produces more than optimal quantity and earns lower profits. D) The firm produces less than optimal quantity and earns lower profits.

The number of artichokes sold decreases; the total expenditure decreases. Correct Answer The number of artichokes sold decreases; the total expenditure increases. The number of artichokes sold increases; the total expenditure increases. The number of artichokes sold increases; the total expenditure decreases.

Suppose that the demand for artichokes (Qa) is given as: Qa = 120 - 4P Suppose that the price of artichokes increases to $12 from $10. What will happen to the number of artichokes sold and the total expenditure by consumers on artichokes?

GPT lowering the market price shifting the supply curve leftward shifting the demand curve leftward X Both the first and the second choices are plausible actions

Suppose there is currently a surplus of wheat on the world market. The problem of excess supply may be removed from the market by

X Surplus; 145 Shortage; 145 Surplus; 200 Shortage; 200

The U.S. Department of Agriculture is interested in analyzing the domestic market for corn. The USDA's staff economists estimate the following equations for the demand and supply curves: Qd = 1,600 - 125P Qs = 440 + 165P Quantities are measured in millions of bushels; prices are measured in dollars per bushel. The government currently has a $4.50 per bushel support price in place. What impact will this support price have on the market?

D

The amount of money that a firm pays to buy inputs is called what? A) fixed cost B) marginal cost C) total cost D) variable cost

Point C Point B Correct Answer: Point D Point A

The figure below shows an isoquant function for the production of orange. https://www.chegg.com/homework-help/questions-and-answers/15-diagram-shows-isoquant-production-wheat-capital-labor-point-highest-marginal-productivi-q31436488

When a good has a unitary price elasticity, consumer expenditures for the good change in the same direction as a price change change in the opposite direction to a price change but not necessarily by the same percentage as the price change Correct Answer do not change when the price of the good decreases change in the opposite direction and by the same percentage as any price change

When a good has a unitary price elasticity, consumer expenditures for the good change in the same direction as a price change change in the opposite direction to a price change but not necessarily by the same percentage as the price change Correct Answer do not change when the price of the good decreases change in the opposite direction and by the same percentage as any price change

A shift to the right in the supply curve for TV sets and a shift to the right in the demand curve for TV sets. A shift to the right in the supply curve for TV sets and a shift to the left in the demand curve for TV sets. X GPT A shift to the left in the supply curve for TV sets and a shift to the right in the demand curve for TV sets. A shift to the left in the supply curve for TV sets and a shift to the left in the demand curve for TV sets.

Which of the following can lead to an unambiguous increase in the price of TV sets?

C

Which of the following events must cause equilibrium quantity to fall? A) demand and supply both decrease B) demand increases and supply decreases C) demand decreases and supply increases D) demand and supply both increase

X I only II and III only II only I and II only I, II, and III

Which of the following is expected to cause a leftward shift in the demand curve for cars?I. A large decrease in the price of public transportation.II. A large drop in the price of gasoline.III. A large drop in the costs of producing gasoline.

Perfectly competitive markets are composed of many buyers and sellers. Some markets may have only a few sellers but exhibit the properties of perfect competition. A market may be composed of only one buyer and one seller. X) All of the above statements are correct.

Which of the following statements is false?

Which of the following would cause a shift to the right of the supply curve for gasoline? 1 A large increase in the price of public transportation. 2 A large decrease in the price of automobiles. 3 A large reduction in the costs of producing gasoline. A) 1 B) 2 X GPT -> C) 3 D) 2 and 3

Which of the following would cause a shift to the right of the supply curve for gasoline? A large increase in the price of public transportation. A large decrease in the price of automobiles. A large reduction in the costs of producing gasoline.