ECON 528 FINAL EXAM FULLY SOLVED EXAM
PAPER GRADED A+
◉ Microeconomics studies the allocation of.
Answer: scarce resources
◉ Microeconomic models are used to.
Answer: make predictions.
explain real-life phenomena.
evaluate production alternatives.
◉ Managerial Economics as a specialized branch of Economics.
Answer: Provide logic and methodology to find solutions to business
problems
◉ Unlike an accountant, an economist measures costs on a(n)
________ basis.
Answer: replacement
◉ When an economist uses the term "cost" referring to a firm, the
economist refers to the.
,Answer: opportunity cost of producing a good or service, which
includes both implicit and explicit cost
◉ Accounting costs.
Answer: are historical costs
◉ A firm earns a normal profit when its total revenues just offset
both the ________ cost and ________ cost..
Answer: accounting; opportunity
◉ If Melissa owns a software company that incurs no fixed costs,
then.
Answer: her total cost equals her total variable cost
◉ In the short run, a firm cannot change the amount of capital it
uses. Therefore the cost of capital is a.
Answer: fixed cost.
◉ Because the amount of labor a firm employs can be changed, the
cost of labor is known as.
Answer: variable cost.
◉ Marginal cost equals.
,Answer: the change in total cost that results from a one-unit
increase in output
◉ Lauren runs a chili restaurant in San Francisco. Her total revenue
last year was $110,000. The rent on her restaurant was $48,000, her
labor costs were $42,000, and her materials, food and other variable
costs were $20,000. Lauren could have worked as a biologist and
earned $50,000 per year. An economist calculates her implicit costs
as.
Answer: $50,000
◉ A factor of production that can be easily changed in the relevant
time period is called a:.
Answer: variable input.
◉ Golda Rush quit her job as a manager for Home Depot to start her
own hair dressing salon, Goldilocks. She gave up a salary of $40,000
per year, invested her savings of $30,000 (which was earning 5
percent interest) and borrowed $10,000 from a close friend,
agreeing to pay 5 percent interest per year. In her first year, Golda
spent $18,000 to rent a salon, hired a part-time assistant for $12,000
and incurred another $15,000 on equipment and hairdressing
material. Based on this information, what is the amount of her
implicit costs?.
Answer: 41,500
, ◉ Accounting costs exclude implicit costs..
Answer: true
◉ Adam spent $10,000 on new equipment for his small business,
"Adam's Fitness Studio." Membership at his fitness center is very low
and at this rate, Adam needs an additional $12,000 per year to keep
his studio open. Which of the following is true?
a. The $10,000 Adam spent on equipment is the total cost of starting
the business and the $12,000 he'll need to continue operations is a
marginal cost.
b. The $10,000 Adam spent on equipment is a fixed cost of business
and the $12,000 he'll need to continue operations is a variable cost.
Correct
c. The variable cost of running the studio is $22,000.
d. The fixed cost of running the studio is $22,000..
Answer: The $10,000 Adam spent on equipment is a fixed cost of
business and the $12,000 he'll need to continue operations is a
variable cost.
◉ Which of the following is the best example of a short run
adjustment?
a. Your local Wal-Mart hires two more associates.
b. Toyota builds a new assembly plant in Texas.
c. Smith University completed negotiations to acquire a large piece
of land to build its new library.
PAPER GRADED A+
◉ Microeconomics studies the allocation of.
Answer: scarce resources
◉ Microeconomic models are used to.
Answer: make predictions.
explain real-life phenomena.
evaluate production alternatives.
◉ Managerial Economics as a specialized branch of Economics.
Answer: Provide logic and methodology to find solutions to business
problems
◉ Unlike an accountant, an economist measures costs on a(n)
________ basis.
Answer: replacement
◉ When an economist uses the term "cost" referring to a firm, the
economist refers to the.
,Answer: opportunity cost of producing a good or service, which
includes both implicit and explicit cost
◉ Accounting costs.
Answer: are historical costs
◉ A firm earns a normal profit when its total revenues just offset
both the ________ cost and ________ cost..
Answer: accounting; opportunity
◉ If Melissa owns a software company that incurs no fixed costs,
then.
Answer: her total cost equals her total variable cost
◉ In the short run, a firm cannot change the amount of capital it
uses. Therefore the cost of capital is a.
Answer: fixed cost.
◉ Because the amount of labor a firm employs can be changed, the
cost of labor is known as.
Answer: variable cost.
◉ Marginal cost equals.
,Answer: the change in total cost that results from a one-unit
increase in output
◉ Lauren runs a chili restaurant in San Francisco. Her total revenue
last year was $110,000. The rent on her restaurant was $48,000, her
labor costs were $42,000, and her materials, food and other variable
costs were $20,000. Lauren could have worked as a biologist and
earned $50,000 per year. An economist calculates her implicit costs
as.
Answer: $50,000
◉ A factor of production that can be easily changed in the relevant
time period is called a:.
Answer: variable input.
◉ Golda Rush quit her job as a manager for Home Depot to start her
own hair dressing salon, Goldilocks. She gave up a salary of $40,000
per year, invested her savings of $30,000 (which was earning 5
percent interest) and borrowed $10,000 from a close friend,
agreeing to pay 5 percent interest per year. In her first year, Golda
spent $18,000 to rent a salon, hired a part-time assistant for $12,000
and incurred another $15,000 on equipment and hairdressing
material. Based on this information, what is the amount of her
implicit costs?.
Answer: 41,500
, ◉ Accounting costs exclude implicit costs..
Answer: true
◉ Adam spent $10,000 on new equipment for his small business,
"Adam's Fitness Studio." Membership at his fitness center is very low
and at this rate, Adam needs an additional $12,000 per year to keep
his studio open. Which of the following is true?
a. The $10,000 Adam spent on equipment is the total cost of starting
the business and the $12,000 he'll need to continue operations is a
marginal cost.
b. The $10,000 Adam spent on equipment is a fixed cost of business
and the $12,000 he'll need to continue operations is a variable cost.
Correct
c. The variable cost of running the studio is $22,000.
d. The fixed cost of running the studio is $22,000..
Answer: The $10,000 Adam spent on equipment is a fixed cost of
business and the $12,000 he'll need to continue operations is a
variable cost.
◉ Which of the following is the best example of a short run
adjustment?
a. Your local Wal-Mart hires two more associates.
b. Toyota builds a new assembly plant in Texas.
c. Smith University completed negotiations to acquire a large piece
of land to build its new library.
