1. In order to produce 100 pairs of oven gloves, Marcia incurs an average cost of $2.50 per pair. Marcia's marginal cost is constant at $10.00 for every pair of oven gloves produced. The total cost to produce 50 pairs of oven gloves is.
A) $200.00
B) $250.00
C) $500.00
D) $300.00
2. In a free market economy, firms operating in a perfectly competitive industry are said to have only one major choice to make. Which of the following correctly sets out that choice?
A) What quantity of labor is needed
B) What quantity to produce
C) What price to charge
D) What quality to produce
3. Why would labor be treated as a variable cost?
A) Labor costs are an input cost that firms are unable to change in the short run
B) Producing larger quantities of a good or service generally requires more workers
C) They are costs incurred in the act of producing that will decrease with quantity produced
D) They are made before production starts and vary according to the specific line of business
4. The government distributes food stamps that can only be used to acquire food to low-income families. The budget line graph will show food on the horizontal axis and everything else on the vertical axis. After receiving food stamps, Ted's family is able to consume the same amount of food. The new consumption point for Ted's family will be:
A) on the new budget line, directly to the right of the old consumption point
B) on the new budget line, directly above the old consumption point
C) on the new budget line, above and to the right of the old consumption point
D) remain precisely the same as the old consumption point
5. In May and June, Tammy spent all her clothing budget on bathing suits and beach bags. Each bathing suit cost $75. At Tammy's optimal choice, her marginal utility from the last bathing suit purchased is 300 and her marginal utility from the last beach bag purchased is 200. This means that each handbag must cost:
A) $25
B) $100
C) $150
D) $50
6. When economists attempt to predict the spending patterns of U.S. households, they will typically view the __________________________ as a primary determining factor that influences the individual consumption choices that each will make.
A) National average spending level
B) National average savings level
C) Income level of each household
D) Nation's perennial political debate
7. In a monopolistic competitive industry, firs can try to differentiate their products by
A) enhancing product's physical aspects and all of the above
B) choosing optimal locations from which the product is sold
C) creating optimal perceptions of the product
D) enhancing the intangible aspects of the product
8. If a firm holds a pure monopoly in the market and is able to sell 4 units of output at $2.00 per unit and 5 units of output at $1.75 per unit, it will produce and sell the fifth unit if its marginal cost is
A) $1.00 or less
B) $0.75 or less
C) $1,75 or less
D) $2.00 or less
9. If monopolists are able to produce fewer goods and sell them at a higher price than they could under perfect competition, the result will be
A) government deregulation
B) abnormally high sustained profits
C) irregularly high unsustainable profits
D) elimination of barriers to entry
10. What qualities would ideally suit a monopolistic firm with regard to barriers to entry?
A) Government rules on prices, quantities, or conditions of entry in an industry
B) A few impediments to limit new firms from operating and expanding within the market
C) Government regulations that provide no barriers to entry, exit, or competition
D) Sufficient strength to prevent or discourage potential competitors from entering the market