Econ 528 Final Exam – Questions With Expert
Solutions
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Terms in this set (139)
,An increase in input costs in the a. The demand for gasoline-powered automobiles
production of electric automobiles would increase and the equilibrium price of
caused the price of electric gasoline-powered automobiles would increase
automobiles to rise. Holding
everything else constant, how would
this affect the market for gasoline-
powered automobiles (a substitute
for electric automobiles)?
a. The demand for gasoline-powered
automobiles would increase and the
equilibrium price of gasoline-
powered automobiles would
increase.
b. The supply of gasoline-powered
automobiles would increase and the
equilibrium price of gasoline-
powered automobiles would
decrease.
c. The demand for gasoline-powered
automobiles would decrease
because consumers could afford to
buy fewer gasoline-powered
automobiles.
d. The demand for gasoline-powered
automobiles would increase and the
equilibrium price of gasoline-
powered automobiles would
decrease.
,A perfectly competitive firm b. Yes, it should continue to produce because it is
produces 3,000 units of a good at a minimizing its loss
total cost of $36,000. The fixed cost
of production is $20,000. The price of
each good is $10. Should the firm
continue to produce in the short run?
a. No, it should shut down because it
is making a loss.
b. Yes, it should continue to produce
because it is minimizing its loss.
c. Yes, it should continue to produce
because its price exceeds its average
fixed cost.
d. There is insufficient information to
answer the question.
Max Shreck, an accountant, quit his b. Max should continue to run the tattoo parlor until
$80,000-a-year job and bought an his lease runs out
existing tattoo parlor from its
previous owner, Sylvia Sidney. The
lease has five years remaining and
requires a monthly payment of
$4,000. Max's explicit cost amounts to
$3,000 per month more than his
revenue. Should Max continue
operating his business?
a. Max's explicit cost exceeds his total
revenue. He should shut down his
tattoo parlor.
b. Max should continue to run the
tattoo parlor until his lease runs out.
c. This cannot be determined without
information on his revenue.
d. If Max's marginal revenue is greater
than or equal to his marginal cost,
then he should stay in business.
, A perfectly competitive firm's short- b. upward sloping and is the portion of the marginal
run supply curve is cost curve that lies above the average variable cost
curve
a. upward sloping and is the portion
of the marginal cost curve that lies
above the average total cost curve.
b. upward sloping and is the portion
of the marginal cost curve that lies
above the average variable cost
curve.
c. perfectly elastic at the market
price.d. horizontal at the minimum
average total cost.
d. horizontal at the minimum average
total cost.
If a typical firm in a perfectly a. new firms will enter in the long run causing
competitive industry is earning market supply to increase, market price to fall and
profits, then profits to decrease.
a. new firms will enter in the long run
causing market supply to increase,
market price to fall and profits to
decrease.
b. all firms will continue to earn
profits.
c. new firms will enter in the long run
causing market supply to decrease,
market price to rise and profits to
increase.
d. the number of firms in the industry
will remain constant in the long run.
Solutions
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Match Blocks Charms NEW
Terms in this set (139)
,An increase in input costs in the a. The demand for gasoline-powered automobiles
production of electric automobiles would increase and the equilibrium price of
caused the price of electric gasoline-powered automobiles would increase
automobiles to rise. Holding
everything else constant, how would
this affect the market for gasoline-
powered automobiles (a substitute
for electric automobiles)?
a. The demand for gasoline-powered
automobiles would increase and the
equilibrium price of gasoline-
powered automobiles would
increase.
b. The supply of gasoline-powered
automobiles would increase and the
equilibrium price of gasoline-
powered automobiles would
decrease.
c. The demand for gasoline-powered
automobiles would decrease
because consumers could afford to
buy fewer gasoline-powered
automobiles.
d. The demand for gasoline-powered
automobiles would increase and the
equilibrium price of gasoline-
powered automobiles would
decrease.
,A perfectly competitive firm b. Yes, it should continue to produce because it is
produces 3,000 units of a good at a minimizing its loss
total cost of $36,000. The fixed cost
of production is $20,000. The price of
each good is $10. Should the firm
continue to produce in the short run?
a. No, it should shut down because it
is making a loss.
b. Yes, it should continue to produce
because it is minimizing its loss.
c. Yes, it should continue to produce
because its price exceeds its average
fixed cost.
d. There is insufficient information to
answer the question.
Max Shreck, an accountant, quit his b. Max should continue to run the tattoo parlor until
$80,000-a-year job and bought an his lease runs out
existing tattoo parlor from its
previous owner, Sylvia Sidney. The
lease has five years remaining and
requires a monthly payment of
$4,000. Max's explicit cost amounts to
$3,000 per month more than his
revenue. Should Max continue
operating his business?
a. Max's explicit cost exceeds his total
revenue. He should shut down his
tattoo parlor.
b. Max should continue to run the
tattoo parlor until his lease runs out.
c. This cannot be determined without
information on his revenue.
d. If Max's marginal revenue is greater
than or equal to his marginal cost,
then he should stay in business.
, A perfectly competitive firm's short- b. upward sloping and is the portion of the marginal
run supply curve is cost curve that lies above the average variable cost
curve
a. upward sloping and is the portion
of the marginal cost curve that lies
above the average total cost curve.
b. upward sloping and is the portion
of the marginal cost curve that lies
above the average variable cost
curve.
c. perfectly elastic at the market
price.d. horizontal at the minimum
average total cost.
d. horizontal at the minimum average
total cost.
If a typical firm in a perfectly a. new firms will enter in the long run causing
competitive industry is earning market supply to increase, market price to fall and
profits, then profits to decrease.
a. new firms will enter in the long run
causing market supply to increase,
market price to fall and profits to
decrease.
b. all firms will continue to earn
profits.
c. new firms will enter in the long run
causing market supply to decrease,
market price to rise and profits to
increase.
d. the number of firms in the industry
will remain constant in the long run.
