Reference no: EM132432686

Please help me to answer the following:

 

1. Economic profits are: 

 

a. Total revenue minus total cost

 

b. Marginal revenue minus marginal cost

 

c. Total revenue minus total opportunity cost

 

d. Total profits of the economy as a whole

2. Suppose both supply and demand decrease. What effect will this have on price? 

 

a. It will fall

 

b. It will rise

 

c. It may rise or fall

 

d. It will remain the same

3. Demand shifters do not include 

 

a. The price of the good

 

b. The consumer's income

 

c. The level of advertising

 

d. The price of the other goods

4. Suppose the demand function is given by Q_X^d = 8P_X^0.5 P_Y^0.25 M^0.12 H. Then the cross-price elasticity between goods X and Y is: 

 

a. 4.00

 

b. 0.25

 

c. 0.50

 

d. 8.33

5. Which of the following is an implicit cost to a firm that produces a good or service? 

 

a. Labor costs

 

b. Costs of operating production machinery

 

c. Foregone profits of producing a different good or service

 

d. Costs of renting or buying land for a production site

6. The own-price elasticity of demand for apples is -1.2. If the price of apples falls by 5%, what will happen to the quantity of apples demanded? 

 

a. It will increase 5%

 

b. It will fall 4.3%

 

c. It will increase 4.2%

 

d. It will increase 6%

7. A price elasticity of zero corresponds to a demand curve that is: 

 

a. Horizontal

 

b. Downward sloping with a slope always equal to 1

 

c. Vertical

 

d. Either vertical or horizontal

8. As we move down along a linear demand curve, the price elasticity of demand becomes more 

 

a. Elastic

 

b. Inelastic

 

c. Log-linear

 

d. Variable

9. The production function Q = L^.5K^.5 is called 

 

a. Cobb Douglas

 

b. Leontief

 

c. Linear

 

d. None of the statements associated with this question are correct

10. The absolute value of the slope of the indifference curve is called the: 

 

a. Marginal revenue

 

b. Average rate of substitution

 

c. Marginal rate of substitution

 

d. Marginal cost

11. Given that income is $200 and the price of good Y is $40. What is the vertical intercept of the budget line? 

 

a. 8,000

 

b. 20

 

c. 1/5

 

d. 5

12. The change in total output attributable to the last unit of an input is the: 

 

a. Total product

 

b. Average product

 

c. Marginal product

 

d. Marginal return

13. The combinations of inputs that produce a given level of output are depicted by: 

 

a. Indifference curves

 

b. Budget lines

 

c. Isocost curves

 

d. Isoquants

14. Which of the following is true under monopoly? 

 

a. Profits are always positive

 

b. P > MC

 

c. P = MR

 

d. All of the above are true for monopoly

 

15. If marginal benefits exceed marginal costs, it is profitable to: 

 

a. Increase Q

 

b. Decrease Q

 

c. Stay at that level of Q

 

d. All of the statements associated with this question are correct

 

16. The law of demand states that, holding all else constant: 

 

a. As price falls, demand will fall also

 

b. As price rises, demand will also rise

 

c. Price has no effect on quantity demanded

 

d. As price falls, quantity demanded rises

17. You are the manager of a firm that sells its product in a competitive market at a price of $50. Your firm's cost function is C = 40 + 5Q². The profit-maximizing output for your firm is 

 

a. 4/5

 

b. 10

 

c. 5

 

d. 45

18. Differentiated goods are a feature of a: 

 

a. Perfectly competitive market

 

b. Monopolistically competitive market

 

c. Monopolistic market

 

d. Monopolistically competitive market and monopolistic market

19. Which of the following is a correct representation of the profit maximization condition for a monopoly? 

 

a. P = MR

 

b. MC = MR

 

c. P = ATC + MR

 

d. MR = MC + ATC

20. A linear demand function exhibits: 

 

a. Constant demand elasticity

 

b. More elastic demand as output increases

 

c. Less elastic demand as output increases

 

d. Insufficient information to determine

 

21. Differentiated goods are not a feature of a 

 

a. Perfectly competitive market

 

b. Monopolistically competitive market

 

c. Monopolistic market

 

d. Perfectly competitive market and monopolistic market

 

22. Which of the following is a profit-maximizing condition for a monopolist? 

 

a. MR = MC

 

b. Q₁ = Q₂ =... = Q_n

 

c. P = MR

 

d. All of the statements associated with this question are correct

23. What is the average product of labor, given that the level of labor equals 10, total output equals 1200 and the marginal product of labor equals 200? 

 

a. 20

 

b. 120

 

c. 6

 

d. 2000

 

24. Changes in the price of good A leads to a change in: 

 

a. Demand of good A

 

b. Demand of good B

 

c. The quantity demanded of good A

 

d. The quantity demanded of good B

 

25. Which of the following is a linear demand function? 

 

a. Q_X^d = a₀ + a_XP_X + a_YP_Y + a_MM + a_HH

 

b. Q_X^d = a₀P_X^aX P_Y^aY M^aM H^aH

 

c. Q_X^d = a₀ + a_XP_X² + a_YP_Y² + a_MM² + a_MH²

 

d. Q_X^d = a₀ + a_X log P_X + a_Y log P_Y + a_M log M + a_M log H

26. Which of the following is not a supply shifter? 

 

a. Level of technology

 

b. Prices of inputs

 

c. Average income level

 

d. Weather

27. A floor price is 

 

a. The minimum legal price that can be charged in a market

 

b. The maximum legal price that can be charged in a market

 

c. Below the initial market equilibrium price

 

d. Equal to the initial market equilibrium price

28. The production function is Q = K^.6 L^.4. The marginal rate of technical substitution is: 

 

a. 2/3 K^-1 L

 

b. K^-1 L^-1

 

c. 2/3 K L^-1

 

d. K^.4 L^-.6

29. Costs that change as output changes are: 

 

a. Variable costs

 

b. Fixed costs

 

c. Sunk costs

 

d. None of the statements associated with this question are correct

30. Which of the following is true? 

 

a. A monopolist produces on the inelastic portion of its demand

 

b. A monopolist always earns an economic profit

 

c. The more inelastic the demand, the closer marginal revenue is to price

 

d. In the short run a monopoly will shutdown if P < AVC

31. The maximum legal price that can be charged in a market is: 

 

a. A price floor

 

b. An ad valorem tax

 

c. The market equilibrium price

 

d. A price ceiling

32. Suppose market demand and supply are given by Q^d = 100 - 2P and Q^S = 5 + 3P. If a price ceiling of $15 is imposed, what will be the resulting full economic price? 

 

a. $19

 

b. $21

 

c. $6

 

d. $25

33. Other things held constant, the greater the price of a good 

 

a. The lower the demand

 

b. The higher the demand

 

c. The greater the consumer surplus

 

d. The lower the consumer surplus

34. You are the manager of a monopoly that faces a demand curve described by P = 85 - 5Q. Your costs are C = 20 + 5Q. The profit-maximizing price is 

 

A. 45

 

b. 55

 

c. 60

 

d. 50

35. Which of the following market structures would you expect to yield the greatest product variety? 

 

a. Monopoly

 

b. Monopolistic Competition

 

c. Bertrand Oligopoly

 

d. Perfect Competition

36. In a monopoly, a decrease in a firm's marginal cost leads to 

 

a. Reduced output and a higher price

 

b. Reduced output and a lower price

 

c. Higher output and a higher price

 

d. Higher output and a lower price

37. Which of the following is true of a perfectly contestable market? 

 

a. P = MC

 

b. P > MC

 

c. P < ATC

 

d. P > MC and P < ATC

38. Given a cost function C(Q) = 200 + 14Q + 8Q², what is the marginal cost function? 

 

a. 14 + 16Q

 

b. 14Q + 8Q²

 

c. 200 + 8Q²

 

d. 14 + 16Q²

39. For a cost function C = 100 + 10Q + Q², the marginal cost of producing 10 units of output is 

 

a. 10

 

b. 200

 

c. 210

 

d. None of the statements associated with this question are correct

 

 

40. Other things equal, the greater the interest rate: 

 

a. The lower the NPV

 

b. The higher the NPV

 

c. The higher the PV

 

d. None of the statements associated with this question are correct