Jess
February 20th, 2013, 09:58 PM
due by Monday, February 25, 10 am EST
1. The implicit cost of capital is:
A. the opportunity cost of capital used by a business.
B. irrelevant for determining economic profit.
C. the expense associated with buying machines.
D. the expense associated with leasing machines.
2. Sarah's accountant tells her that she made a profit of $43,002 running a pottery studio in Orlando. Sarah's husband, an economist, claims Sarah lost $43,002 running her pottery studio. This means her husband is claiming that she incurred ________ in ________ costs.
A. $43,002; explicit
B. $86,004; implicit
C. $86,004; explicit
D. $43,002; implicit
3. Which of the following best describes a “how much” decision?
A. Should I rent a movie or watch a baseball game on television?
B. Should I buy a third hot dog?
C. Should I attend graduate school or immediately enter the labor force?
D. Should I drive to work or ride my bicycle?
4. Which of the following is an “either–or” decision?
A. Chris must decide how many hours to work each week at his part-time job.
B. Dylan must decide whether to major in economics or finance.
C. Allen must decide how many courses to take this semester.
D. Sally must decide how many hours to spend studying for each of the four courses that she is taking this semester.
5. Until recently Rosemarie worked as an accountant, earning $30,000 annually. Then she inherited a piece of commercial real estate that had been renting for $12,000 annually. Rosemarie decided to leave her job and operate a Peruvian restaurant in the space she inherited. At the end of the first year, her books showed total revenues of $260,000 and total costs of $230,000 for food, utilities, cooks, and other supplies. Her economic profit at the end of one year is:
A. $30,000.
B. –$12,000.
C. $0.
D. $230,000.
6. According to the optimal output rule, if the marginal benefit is:
A. equal to the marginal cost, an activity should be increased.
B. more than the marginal cost, an activity should be increased.
C. less than the marginal cost, an activity should be increased.
D. more than the marginal cost, net benefit is maximized.
7. Whenever marginal benefit is less than marginal cost, the decision maker should do ________ of the activity.
A. that exact amount
B. less
C. none
D. more
8. Joan loves to eat sushi. Her first piece of sushi normally gives her a marginal benefit of $5. Each additional piece creates a marginal benefit that declines by $0.25 per piece. If her favorite sushi bar charges $2.75 per piece of sushi, how many pieces should she eat?
A. 5
B. 11
C. 8
D. 10
9. http://i48.tinypic.com/al4t4j.jpg
(Figure: The Marginal Analysis of Cell Phones) Look at the figure The Marginal Analysis of Cell Phones. You are considering purchasing cell phones for your department. The graph represents your marginal benefit and marginal cost curves. How many cell phones will you consume?
A. 4
B. 2
C. 1
D. 3
10. http://i48.tinypic.com/al4t4j.jpg
(Figure: The Marginal Analysis of Cell Phones) Look at the figure The Marginal Analysis of Cell Phones. You are considering purchasing cell phones for your department. The graph represents your marginal benefit and marginal cost curves. If you consume the fifth cell phone, your net change in total benefit will be equal to:
A. $4.
B. $0.
C. –$2.
D. $2.
11. In the short run:
A. some inputs are fixed and some inputs are variable.
B. all costs are variable.
C. all inputs are fixed.
D. all inputs are variable.
12. If two firms are identical in all respects except that one has more capital than another, the total product curve for the firm with more capital:
A. must equal the total product curve for the firm with less capital.
B. will lie above the total product curve for the firm with less capital.
C. will show no diminishing marginal returns.
D. will lie below the total product curve for the firm with less capital.
13. http://i49.tinypic.com/2e3r6m0.jpg
(Figure: The Total Product) Look at the figure The Total Product. Between points A and B the marginal product of labor is:
A. increasing.
B. falling.
C. zero.
D. infinite.
14. http://i49.tinypic.com/2e3r6m0.jpg
(Figure: The Total Product) Look at the figure The Total Product. As labor is hired between L1 and L2, the ________ is ________ and the ________ is ________.
A. marginal product; zero; total product; falling
B. total product; rising; marginal product; zero
C. total product; rising; marginal product; positive
D. total product; rising; marginal product; negative
15. http://i46.tinypic.com/351icr6.jpg
(Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve. In the figure, the total cost of producing five pairs of boots is approximately:
A. $108.
B. $408.
C. $82.
D. $17.
16. Rebecca knows that Becca Furniture's marginal cost curve is above the average total cost curve. This means Becca Furniture's average total cost curve:
A. must be rising.
B. may be rising, falling, or flat depending on other things.
C. must be flat.
D. must be falling.
17. If marginal cost is equal to average total cost, then:
A. marginal cost is increasing.
B. average total cost is at its minimum.
C. average total cost is at its maximum.
D. average total cost is increasing.
18. http://i48.tinypic.com/34fem40.jpg
(Figure: Short-Run Costs) Look at the figure Short-Run Costs. A is the ________ cost curve.
A. marginal
B. average variable
C. total
D. average total
19. http://i48.tinypic.com/34fem40.jpg
(Figure: Short-Run Costs) Look at the figure Short-Run Costs. B is the ________ cost curve.
A. average variable
B. average total
C. marginal
D. total
20. The U-shape of the long-run average total cost curve is primarily due to:
A. technological change.
B. economies and diseconomies of scale.
C. diminishing returns.
D. increasing and then diminishing returns.
1. The implicit cost of capital is:
A. the opportunity cost of capital used by a business.
B. irrelevant for determining economic profit.
C. the expense associated with buying machines.
D. the expense associated with leasing machines.
2. Sarah's accountant tells her that she made a profit of $43,002 running a pottery studio in Orlando. Sarah's husband, an economist, claims Sarah lost $43,002 running her pottery studio. This means her husband is claiming that she incurred ________ in ________ costs.
A. $43,002; explicit
B. $86,004; implicit
C. $86,004; explicit
D. $43,002; implicit
3. Which of the following best describes a “how much” decision?
A. Should I rent a movie or watch a baseball game on television?
B. Should I buy a third hot dog?
C. Should I attend graduate school or immediately enter the labor force?
D. Should I drive to work or ride my bicycle?
4. Which of the following is an “either–or” decision?
A. Chris must decide how many hours to work each week at his part-time job.
B. Dylan must decide whether to major in economics or finance.
C. Allen must decide how many courses to take this semester.
D. Sally must decide how many hours to spend studying for each of the four courses that she is taking this semester.
5. Until recently Rosemarie worked as an accountant, earning $30,000 annually. Then she inherited a piece of commercial real estate that had been renting for $12,000 annually. Rosemarie decided to leave her job and operate a Peruvian restaurant in the space she inherited. At the end of the first year, her books showed total revenues of $260,000 and total costs of $230,000 for food, utilities, cooks, and other supplies. Her economic profit at the end of one year is:
A. $30,000.
B. –$12,000.
C. $0.
D. $230,000.
6. According to the optimal output rule, if the marginal benefit is:
A. equal to the marginal cost, an activity should be increased.
B. more than the marginal cost, an activity should be increased.
C. less than the marginal cost, an activity should be increased.
D. more than the marginal cost, net benefit is maximized.
7. Whenever marginal benefit is less than marginal cost, the decision maker should do ________ of the activity.
A. that exact amount
B. less
C. none
D. more
8. Joan loves to eat sushi. Her first piece of sushi normally gives her a marginal benefit of $5. Each additional piece creates a marginal benefit that declines by $0.25 per piece. If her favorite sushi bar charges $2.75 per piece of sushi, how many pieces should she eat?
A. 5
B. 11
C. 8
D. 10
9. http://i48.tinypic.com/al4t4j.jpg
(Figure: The Marginal Analysis of Cell Phones) Look at the figure The Marginal Analysis of Cell Phones. You are considering purchasing cell phones for your department. The graph represents your marginal benefit and marginal cost curves. How many cell phones will you consume?
A. 4
B. 2
C. 1
D. 3
10. http://i48.tinypic.com/al4t4j.jpg
(Figure: The Marginal Analysis of Cell Phones) Look at the figure The Marginal Analysis of Cell Phones. You are considering purchasing cell phones for your department. The graph represents your marginal benefit and marginal cost curves. If you consume the fifth cell phone, your net change in total benefit will be equal to:
A. $4.
B. $0.
C. –$2.
D. $2.
11. In the short run:
A. some inputs are fixed and some inputs are variable.
B. all costs are variable.
C. all inputs are fixed.
D. all inputs are variable.
12. If two firms are identical in all respects except that one has more capital than another, the total product curve for the firm with more capital:
A. must equal the total product curve for the firm with less capital.
B. will lie above the total product curve for the firm with less capital.
C. will show no diminishing marginal returns.
D. will lie below the total product curve for the firm with less capital.
13. http://i49.tinypic.com/2e3r6m0.jpg
(Figure: The Total Product) Look at the figure The Total Product. Between points A and B the marginal product of labor is:
A. increasing.
B. falling.
C. zero.
D. infinite.
14. http://i49.tinypic.com/2e3r6m0.jpg
(Figure: The Total Product) Look at the figure The Total Product. As labor is hired between L1 and L2, the ________ is ________ and the ________ is ________.
A. marginal product; zero; total product; falling
B. total product; rising; marginal product; zero
C. total product; rising; marginal product; positive
D. total product; rising; marginal product; negative
15. http://i46.tinypic.com/351icr6.jpg
(Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve. In the figure, the total cost of producing five pairs of boots is approximately:
A. $108.
B. $408.
C. $82.
D. $17.
16. Rebecca knows that Becca Furniture's marginal cost curve is above the average total cost curve. This means Becca Furniture's average total cost curve:
A. must be rising.
B. may be rising, falling, or flat depending on other things.
C. must be flat.
D. must be falling.
17. If marginal cost is equal to average total cost, then:
A. marginal cost is increasing.
B. average total cost is at its minimum.
C. average total cost is at its maximum.
D. average total cost is increasing.
18. http://i48.tinypic.com/34fem40.jpg
(Figure: Short-Run Costs) Look at the figure Short-Run Costs. A is the ________ cost curve.
A. marginal
B. average variable
C. total
D. average total
19. http://i48.tinypic.com/34fem40.jpg
(Figure: Short-Run Costs) Look at the figure Short-Run Costs. B is the ________ cost curve.
A. average variable
B. average total
C. marginal
D. total
20. The U-shape of the long-run average total cost curve is primarily due to:
A. technological change.
B. economies and diseconomies of scale.
C. diminishing returns.
D. increasing and then diminishing returns.