GCU ECN601 Week 4 Exam 1 Latest 2019 April Question # 00600622 Subject: Education Due on: 04/23/2019 Posted On: 04/23/2019 06:09 AM Tutorials: 1 Rating: 4.5/5
Week 4 Exam 1
1Use the
table provided to answer the following question. If hiring the fourth worker
increases total product by 50 units and the price of each unit is $15:
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The firm
should not hire the fourth worker as MR
The firm
should not hire the fourth worker as MR
Marginal
revenue equals $150.
The firm
should hire the fourth worker as MR>MC.
2The change
in quantity demanded derived from a change in price is:
The
movement along a demand curve
The
movement along a supply curve
A shift in
the demand curve
A shift in
the supply curve
3 The
difference between the minimum price the producer is willing to accept and the
price the producer actually receives for a product is referred to as:
Market
surplus
Market
shortage
Consumer
surplus
Producer
surplus
4At a price
for which quantity demanded exceeds quantity supplied, a __________ is
experienced, which pushes the price __________ toward its equilibrium value.
Surplus;
downward
Surplus;
upward
Shortage;
downward
Shortage;
upward
5The
opportunity cost of an action is:
Equal to
the marginal cost of an action
Equal to
explicit cost
Equal to
the cost (value) of the next best alternative forgone
The total
cost of an action
6An example
of a price floor is:
Minimum
wages
Rent
controls in New York
Both A and
B
None of the
above
7A
monopolistically competitive firm will tend to have a more elastic demand curve
than a monopolist because:
The
monopolist can more easily achieve abnormal profits.
The
monopolist makes a more “unique” product.
The
monopolistically competitive firm faces more competition.
Both B and
C
8Use the
table provided to answer the following question. If the firm hires eight workers,
the total fixed costs is:
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$600
$1,200
$1,000
$6,200
9Peter’s
Pizzeria sells both pizzas and soda. It wants to increase the sales of its
pizzas. Assuming that the pizza and the sodas are complements, which of these
strategies can it employ?
Increase
the price of the soda.
Decrease
the price of the soda.
Increase
the quality of the pizza
Both B and
C
10Use the
table provided to answer the following question. How many units should the profit
maximizing firm produce?
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1
2
3
4
11A car
dealership union negotiates a contract that dramatically increases the salaries
of all salesmen. If one of the salesmen is thinking of changing careers to be a
hardware salesman, his opportunity cost:
Would not
be affected
Of becoming
a hardware salesman would decrease
Of becoming
a hardware salesman would increase
None of the
above
12If the
cross-price elasticity of demand between two goods is negative, then:
As the
price of one good rises, the quantity demanded of the other good also rises.
The two
goods are rarely used together by consumers.
The two
goods are substitutes.
The two
goods are complements.
13In an
oligopoly, firms will tend to compete on the basis of price.
True
False
14An
increase in the price of a complement shifts the demand curve to the:
Right
Left
It does not
change the demand curve.
None of the
above
15If the
price elasticity of demand is 0.8 and the firm increases price, revenue will:
Increase
Decrease
Stay
constant
Become
zero, as they would lose all their customers
16A company
invested $400,000 in a technology that reduced the overall costs of production
by reducing their cost per unit from $2 to $1.85. Later, a manager has an
opportunity to outsource production to another company at a cost per unit of
$1.75. If you are the manager, you:
Should
consider the $400,000 as a sunk cost, not relevant to the decision.
Should
reduce his effort by ignoring any new developments and letting the production
run as it is.
Should ignore
the $400,000 fixed cost.
Both A and
C
17An
increase in the price of a substitute shifts the demand curve to the:
Right
Left
It does not
change the demand curve.
None of the
above
18A
business produces 5,000 units per month. It spends $12,000 on raw materials. It
pays wages of $20,000. Other costs include $50,000 for rent, paid by the month.
In order to break even, the selling price per unit will have to be:
$25.20
$16.40
$20.30
$28.00
19A firm
sells 1,000 units per week. It charges $70 per unit, the average variable costs
are $25, and the average fixed costs are $65. In the short run, the firm
should:
Shut down,
as the firm is making a loss of $15,000 per week.
Shut down,
as price is lower than average cost.
Continue
operating, as the firm is covering all the variable costs and some of the fixed
costs.
Shut down,
as it is cost-effective to pay off the remaining fixed costs.
20Which of
the following describes a firm?
Purchases
labor hours from workers.
Borrows
capital from investors.
Combines
labor and capital to create production, moving them from their low value use to
high value use.
All of the
above
21Jim saw a
decrease in the quantity demanded for his firm’s product from 8,000 to 6,000 units
per week when he raised the price of the product from $200 to $250. What is
Jim’s own price elasticity of demand?
1.29
1.00
0.25
0.78
22Use the
table provided to answer the following question. What is the marginal revenue
from producing the fourth unit?
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90
50
0
180
23A manager
invests $20,000 in equipment that would help the company reduce it’s per unit
costs from $15 to $12. He expects the equipment to be in use for the next seven
years. After two years, he realizes that if he outsourced the production, the
unit cost would be $7 instead. At this point what should the senior manager do?
Charge the manager for the next five years of
depreciation
Write off
the equipment as sunk cost and allow for outsourcing since it is cheaper
Not allow
for outsourcing since the equipment is good for another five years.
None of the
above
24The
government decided to reduce taxes on fast-food to increase tax revenue. The
government assumes that fast-food products have:
An
inelastic demand
An elastic
demand
A demand
curve that is upward sloping
A unitary
elastic demand curve
25Which of
the following factors would shift the supply curve for ice cream to the right?
A new
cooling technology emerges.
The price
per unit increases.
The number
of producers in the market for ice cream increase.
Both A and
C
26A firm
sells 1,000 units per week. It charges $15 per unit, the average variable costs
are $10, and the average fixed costs are $25. In the long run, the firm should:
Shut down,
as the firm is making a loss of $10,000 per week.
Shut down,
as price is lower than average total cost.
Continue
operating, as the firm is covering all the variable costs and some of the fixed
costs.
Shut down,
as it is cost effective to pay off the remaining fixed costs.
27Use the
table provided to answer the following question. If the firm hires five
workers, the average cost equals:
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$80
$1,000
Need more
information
$10
28Price
ceilings cause:
Some
suppliers to drop out of the market
A decrease
in the total production in the market
The
creation of black markets
All the
above
29A buyer
values a house at $525,000 and a seller values the same house at $485,000. If
sales tax is 8% and is levied on the seller, then what would be the lowest
price at which the seller would be willing to sell?
$527,000
$523,800
$525,00
$500,000
30In
general, the smaller the price elasticity:
The smaller
the responsiveness of price to changes in quantity.
The smaller
the responsiveness of quantity to changes in price.
The larger
the responsiveness of price to changes in quantity.
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The larger
the responsiveness of quantity to changes in price.
