1.) In a competitive market, the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. A price ceiling of $4 will result in a:
a. Shortage of 12 units
b. Shortage of 20 units
c. Surplus of 12 units
d. Surplus of 20 units
2.) A floor price is:
a. The minimum legal price that a firm can charge
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
3.) An excise tax of $2.00 per pound of sugar placed on the suppliers of sugar would shift the supply curve:
a. Down by $2.00
b. Down by more than $2.00
c. Up by $2.00
d. Up by less than $2.00
4.) Marginal net benefits are:
a. The difference between marginal benefits and marginal costs
b. The difference between the benefits and costs of a project
c. The difference between the present value of the benefits and costs of a project
d. The change in total benefits arising from a change in a managerial control variable
5.) What is implied when the total cost of producing Q1 and Q2 together is more than the total cost of producing Q1 and Q2 separately?
a. Economies of scale
b. Diseconomies of scale
c. Economies of scope
d. Diseconomies of scope
6.) If you put $500 in a savings account at an interest rate of 3 percent, how much money will you have in one year?
a. $503
b. $485.44
c. $721
d. $515
7.) If the absolute value of the own price elasticity of steak is 1.2, a decrease in price will lead to
a. A reduction in total revenue
b. An increase in total revenue
c. No change in total revenue
d. None of the statements is correct
8.) Other thing held constant, producer surplus increases as:
a. The price of a good decreases
b. The price of a good increases
c. The demand curve shift downward
d. None of the above
9.) At what level of output does marginal cost equal marginal revenue?
|
No. Units
Produced
|
Total Revenue
|
Total Costs
|
|
0
|
0
|
0
|
|
10
|
150
|
120
|
|
20
|
300
|
250
|
|
30
|
450
|
400
|
|
40
|
550
|
500
|
|
50
|
600
|
550
|
a. 10
b. 20
c. 30
d. 40
10.) What is the marginal cost of producing the tenth unit?
|
No. Units
Produced
|
Total Revenue
|
Total Costs
|
|
0
|
0
|
0
|
|
10
|
150
|
120
|
|
20
|
300
|
250
|
|
30
|
450
|
400
|
|
40
|
550
|
500
|
|
50
|
600
|
550
|
a. 120
b. 12
c. 30
d. 3
11.) If the interest rate is 10 percent, what is the present value of $10 received one year from now?
a. $10.10
b. $10.05
c. $9.09
d. $10.11
12.) Consider a market characterized by the following inverse demand and supply functions: PX = 10 - 2QX and PX = 2 + 2QX. An $8 per unit price floor will result in a
a. Shortage of 1 unit
b. Surplus of 5 units
c. Shortage of 3 units
d. Surplus of 3 units
13.) Suppose the production function is given by Q = 10K + 8L. What is the average product of capital when 2 units of capital and 10 units of labor are employed
a. 10
b. 8
c. 50
d. 18
14.) What is the average product of labor, given that the level of labor equals 5, total output equals 500, and the marginal product of labor equals 25?
a. 100
b. 125
c. 20
d. 2500
15.) In the end, firms allocate scarce resources toward the production of goods and services most valued by society because
a. The opportunity costs of not producing those goods become too high
b. Managers are benevolent
c. Government regulations
d. None of the above statements are accurate
16.) Good X is an inferior good and its demand is given by Qxd = α0 + αXPX + αYPY + αMM + αHH. Then we know that:
a. αX < 0.
b. αX > 0.
c. M < 0.
d. αM > 0
17.) In the short run, the MC curve crosses the ATC curve at:
a. The point where the ATC curve and AVC curve intersect
b. The minimum of the AFC curve
c. The minimum of the ATC curve
d. The maximum of the ATC curve
18.) Assume that the price elasticity of demand is -.5 for a certain firm's product. If the firm decreases price, the firm's managers can expect total revenue to
a. Decrease
b. Increase
c. Remain constant
d. Either increase or remain constant, depending upon the size of the price increase
19.) When the long-run average cost curve is decreasing (assuming a U-shaped curve) there exist:
a. Economies of scale
b. Diseconomies of scale
c. Constant returns to scale
d. None of these
20.) The period of time defining the long run is characterized by:
a. Managers' ability to adjust all factors of production
b. Only fixed costs of production exist
c. Only fixed costs and variable costs of production exist
d. Greater than three years
21.) Government regulation that defines a minimum legal price that a form can charge is called
a. A price floor
b. A price ceiling
c. An excise tax
d. The market equilibrium price
22.) What is the marginal revenue of producing the fortieth unit
|
No. Units
Produced
|
Total Revenue
|
Total Costs
|
|
0
|
0
|
0
|
|
10
|
150
|
120
|
|
20
|
300
|
250
|
|
30
|
450
|
400
|
|
40
|
550
|
500
|
|
50
|
600
|
550
|
a. 100
b. 10
c. 50
d. 5
23.) "Our marginal revenue is less than our marginal cost at the current production level." This statement indicates that the firm:
a. Is maximizing profits
b. Should increase the quantity produced to increase profits
c. Should decrease the quantity produced to increase profits
d. None of the statements associate with this question are correct
24.) Other things held constant, consumer surplus decrease as
a. The price of a good decreases
b. The price of a good increases
c. The supply curve shift to the right
d. None of the above
25.) Suppose the own price elasticity of demand for good X is -0.2, and the price of good X decreases by 10 percent. We would expect the quantity demanded of good X to:
a. Increase by 2 percent
b. Increase by 10 percent
c. Decrease by 2 percent
d. Decrease by 10 percent
26.) A firm produces output according to a production function:
Q = F(K,L) = min {6K,6L}.
a. How much output is produced when K = 2 and L = 3?
b. If the wage rate is $35 per hour and the rental rate on capital is $25 per hour, what is the cost-minimizing input mix for producing 12 units of output?
Capital:
Labor:
c. How does your answer to part b change if the wage rate decreases to $25 per hour but the rental rate on capital remains at $25 per hour?A firm produces output according to a production function:
a. Capital decreases and labor increases
b. It does not change
c. Capital and labor increase
d. Capital increases and labor decreases
27.) The supply curve for product X is given by QXS = -360 + 10PX .
a. Find the inverse supply curve.
P = + Q
b. How much surplus do producers receive when Qx = 450? When Qx = 1,150?
When QX = 450: $
When QX = 1,150: $
28.) The head of the accounting department at a major software manufacturer has asked you to put together a pro forma statement of the company's value under several possible growth scenarios and the assumption that the company's many divisions will remain a single entity forever. The manager is concerned that, despite the fact that the firm's competitors are comparatively small, collectively their annual revenue growth has exceeded 50 percent over each of the last five years. She has requested that the value projections be based on the firm's current profits of $4.1 billion (which have yet to be paid out to stockholders) and the average interest rate over the past 20 years (7 percent) in each of the following profit growth scenarios:
a. Profits grow at an annual rate of 8 percent. (This one is tricky.)
Instructions: Round your responses to 2 decimal places.
b. Profits grow at an annual rate of 3 percent.
billion
c. Profits grow at an annual rate of 0 percent.
billion
d. Profits decline at an annual rate of 2 percent.
billion
29.) If Starbucks's marketing department estimates the income elasticity of demand for its coffee to be 1.45, how will the prospect of an economic bust (expected to decrease consumers' incomes by 6 percent over the next year) impact the quantity of coffee Starbucks expects to sell?
Instruction: Round your response to 2 decimal places.
It will change by percent.
30.) What is the value of a preferred stock that pays a perpetual dividend of $200 at the end of each year when the interest rate is 4 percent?
Instruction: Round your response to the nearest dollar.