When economists speak of marginal they mean

Assignment Help Business Economics

Reference no: EM13740112

1. When economists speak of "marginal," they mean

a. Opportunity.

b. Scarcity.

c. Incremental.

d. Unimportant.

2. Managers undertake an investment only if

a. Marginal benefits of the investment are greater than zero.

b. Marginal costs of the investment are greater than marginal benefits of the investment.

c. Marginal benefits are greater than marginal costs.

d. Investment decisions do not depend on marginal analysis.

3. A firm produces 500 units per week. It hires 20 full-time workers (40 hours/week) at an hourly wage of $15. Raw materials are ordered weekly, and they cost $10 for every unit produced. The weekly cost of the rent payment for the factory is $2,250. How do the overall costs break down?

a. Total variable cost is $17,000; total fixed cost is $2,250; total cost is $19,250.

b. Total variable cost is $12,000; total fixed cost is $7,250; total cost is $19,250.

c. Total variable cost is $5,000; total fixed cost is $14,250; total cost is $19,250.

d. Total variable cost is $5,000; total fixed cost is $2,250; total cost is $7,250.

4. Total costs increase from $1,500 to $1,800 when a firm increases output from 40 to 50 units. Which of the following is true if marginal cost is constant?

a. FC = $100

b. FC = $200

c. FC = $300

d. FC = $400

5. A manager of a clothing firm is deciding whether to add another factory in addition to one already in production. The manager would compare

a. The total benefits gained from the two factories to the total costs of running the two factories.

b. The incremental benefit expected from the second factory to the total costs of running the two factories.

c. The incremental benefit expected from the second factory to the cost of the second factory.

d. The total benefits gained from the two factories to the incremental costs of running the two factories.

6. A firm is thinking of hiring an additional worker to their organization who they believe can increase total productivity by 100 units a week. The cost of hiring him or her is $1,500 per week. If the price of each unit is $12,

a. The MR of hiring the worker is $1,500.

b. The MC of hiring the worker is $1,200.

c. The firm should not hire the worker since MB < MC.

d. All the above

7. A retailer has to pay $9 per hour to hire 13 workers. If the retailer only needs to hire 12 workers, a wage rate of $7 per hour is sufficient.

What is the marginal cost of the 13th worker?

a. $117

b. $9

c. $33

d. $84

8. If a firm's average cost is rising, then

a. Marginal cost is less than average cost.

b. Marginal cost is rising.

c. Marginal cost is greater than average cost.

d. The firm is making an economic profit.

9. After the first week of his MBA Managerial Economics class, one of your pharmaceutical sales representatives accuses you of committing the sunk-cost fallacy by refusing to allow him to reduce price to make what he considers to be a really tough sale. Which of the following suggests the sales representative may be right?

a. Most of the costs of drug development are sunk, not fixed.

b. Sales representatives are paid a sales commission on revenue, so they don't care about the costs of drug development.

c. Sales representatives don't worry that a low price today may make it more difficult for the company's other sales representatives to charge higher prices to their customers, tomorrow.

d. Sales representatives think only about one thing, sales.

10. A company is producing 15,000 units. At this output level, marginal revenue is $22, and the marginal cost is $18. The firm sells each unit for $48 and average total cost is $40.

What can we conclude from this information?

a. The company is making a loss.

b. The company needs to cut production.

c. The company needs to increase production.

d. Not enough information is provided.

Reference no: EM13740112

Questions Cloud

Unit to correct for the social cost of the noise pollution : A study finds that leaf blowers make too much noise, so the government imposes a $10 tax on the sale of every unit to correct for the social cost of the noise pollution. The tax completely internalizes the externality. Before the corrective tax, Blow..

Decides to charge cola consumers a tax : Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 25,000 cases of cola were sold every week at a price of $7 per case. After the tax, 18,000 cases of cola are sold every week; consumers pay $8 per case (includin..

Quantity supplied at the regulated price : Rent controls force landlords to price apartments below the equilibrium price level. An immediate effect is a shortage (excess demand) of apartments, because the quantity of apartments demanded is greater than the quantity supplied at the regulated p..

Computer programmer with a utility function equal : Sergei is a computer programmer with a utility function equal to U=Y+120L-L . He contracts with Uber that allows him to set his own work hours; they pay him $50/hour. He has allocated himself a work-hour time budget of a maximum of 250 hours per mont..

When economists speak of marginal they mean : When economists speak of "marginal," they mean. Managers undertake an investment only if. A manager of a clothing firm is deciding whether to add another factory in addition to one already in production. The manager would compare. If a firm's average..

Preintervention optimized supply and demand equilibrium : Draw the pre-intervention optimized supply and demand equilibrium. Explain and show what effect it has on the polis.

An attempt to reverse declining global sales : Major restructuring plan in an attempt to reverse declining global sales. Suppose that as part of the restructuring plan Mitsubishi conducts an analysis of how labor and capital are used in its production process. Prior to restructuring Mitsubishi’s ..

Should the system be recommended for investment : A large automobile manufacturing company is considering the installation of a high-tech handling system. The initial cost of the system is $3,000,000 and it is estimated it will save $750,000 per year in manual labor, and will incur $27,500 in operat..

Manufacturing industry are playing tit-for-tat pricing game : Suppose that you were an industry analyst trying to determine if the leading firms in the automobile manufacturing industry are playing a tit-for-tat pricing game. What real world data would you want to examine? What would you consider to be evidence..

User Account

All Pages