ECON 528 Final Exam – Questions With Detailed
Solutions
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Terms in this set (156)
If the marginal product of labor is 2, D. None of the above
the marginal product of capital is 4,
the wage rate is $3, the rental price
of capital is $6, and the price of
output is $1.50, then the firm should
. Increase output by hiring more
labor, more capital, or both.
b. Hold output constant, but hire
more labor and less capital.
c. Decrease output by reducing the
quantity of capital, reducing the
number of units of labor, or both.
d. None of the above is correct.
,When adding another unit of labor diminishing marginal product.
leads to an increase in output that is
smaller than the increases in output
that resulted from adding previous
units of labor, the firm is experiencing
a. diminishing labor.
b. diminishing output.
c. diminishing marginal product.
d. negative marginal product
Which of the following explains why gains from specialization of inputs
long-run average cost at first
decreases as output increases?
a. diseconomies of scale
b. less-efficient use of inputs
c. fixed costs becoming spread out
over more units of output
d. gains from specialization of inputs.
In the long run a company that constant returns to scale because average total cost
produces and sells dog beds incurs is constant as output rises.
total costs of $1,200 when output is
30 beds and $1,600 when output is 40
beds. Firm A exhibits
,Which of the following is a reason As the size of the firm increases it becomes more
why a firm would experience difficult to coordinate the operations of its
diseconomies of scale? manufacturing plants.
A) To finance an increase in the size
of its plant a firm must borrow more
money or sell more shares of stock.
B) As the size of the firm increases, it
becomes more difficult to find
markets where it doesn't already have
operations.
C) As the size of the firm increases it
becomes more difficult to coordinate
the operations of its manufacturing
plants.
D) As the size of the firm increases, it
must operate in other countries
where differences in language,
customs and laws increase its
average costs.
Which of the following would cause an increase in supply and an increase in demand
an increase in the equilibrium price greater than the increase in supply
and an increase in the equilibrium
quantity of watermelons?
A) an increase in demand and an
increase in supply
B) an increase in supply
C) an increase in supply and an
increase in demand greater than the
increase in supply
D) a decrease in demand and an
increase in supply
, Which of the following characteristics Entry barriers into the industry are low.
is common to monopolistic
competition and perfect
competition?
A) Firms produce identical products.
B) Entry barriers into the industry are
low.
C) Each firm faces a downward -
sloping demand curve.
D) Firms take market prices as given.
In a monopolistically competitive will earn zero economic profit in the long run
market, a successful new restaurant because of free entry, but competition will lead
A) can earn economic profits in the restaurants to offer different versions of the same
long run if it uses barriers to restrict product.
entry by new restaurants.
B) will earn zero economic profit in
the long run because of free entry,
but competition will lead restaurants
to offer different versions of the same
product.
C) will face high entry barriers
because of health and safety
regulations to which all restaurants
are subject.
D) must obtain a trademark to ensure
that it will break even in the long run.
A member of a cartel like OPEC has agree to a low cartel production level and then
an incentive to produce more than its quota.
A) argue for larger production quotas
for each member of the cartel.
B) agree to a low cartel production
level and then produce more than its
quota.
C) abide by its individual production
quota.
D) support equal production quotas
for each member.
Solutions
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Terms in this set (156)
If the marginal product of labor is 2, D. None of the above
the marginal product of capital is 4,
the wage rate is $3, the rental price
of capital is $6, and the price of
output is $1.50, then the firm should
. Increase output by hiring more
labor, more capital, or both.
b. Hold output constant, but hire
more labor and less capital.
c. Decrease output by reducing the
quantity of capital, reducing the
number of units of labor, or both.
d. None of the above is correct.
,When adding another unit of labor diminishing marginal product.
leads to an increase in output that is
smaller than the increases in output
that resulted from adding previous
units of labor, the firm is experiencing
a. diminishing labor.
b. diminishing output.
c. diminishing marginal product.
d. negative marginal product
Which of the following explains why gains from specialization of inputs
long-run average cost at first
decreases as output increases?
a. diseconomies of scale
b. less-efficient use of inputs
c. fixed costs becoming spread out
over more units of output
d. gains from specialization of inputs.
In the long run a company that constant returns to scale because average total cost
produces and sells dog beds incurs is constant as output rises.
total costs of $1,200 when output is
30 beds and $1,600 when output is 40
beds. Firm A exhibits
,Which of the following is a reason As the size of the firm increases it becomes more
why a firm would experience difficult to coordinate the operations of its
diseconomies of scale? manufacturing plants.
A) To finance an increase in the size
of its plant a firm must borrow more
money or sell more shares of stock.
B) As the size of the firm increases, it
becomes more difficult to find
markets where it doesn't already have
operations.
C) As the size of the firm increases it
becomes more difficult to coordinate
the operations of its manufacturing
plants.
D) As the size of the firm increases, it
must operate in other countries
where differences in language,
customs and laws increase its
average costs.
Which of the following would cause an increase in supply and an increase in demand
an increase in the equilibrium price greater than the increase in supply
and an increase in the equilibrium
quantity of watermelons?
A) an increase in demand and an
increase in supply
B) an increase in supply
C) an increase in supply and an
increase in demand greater than the
increase in supply
D) a decrease in demand and an
increase in supply
, Which of the following characteristics Entry barriers into the industry are low.
is common to monopolistic
competition and perfect
competition?
A) Firms produce identical products.
B) Entry barriers into the industry are
low.
C) Each firm faces a downward -
sloping demand curve.
D) Firms take market prices as given.
In a monopolistically competitive will earn zero economic profit in the long run
market, a successful new restaurant because of free entry, but competition will lead
A) can earn economic profits in the restaurants to offer different versions of the same
long run if it uses barriers to restrict product.
entry by new restaurants.
B) will earn zero economic profit in
the long run because of free entry,
but competition will lead restaurants
to offer different versions of the same
product.
C) will face high entry barriers
because of health and safety
regulations to which all restaurants
are subject.
D) must obtain a trademark to ensure
that it will break even in the long run.
A member of a cartel like OPEC has agree to a low cartel production level and then
an incentive to produce more than its quota.
A) argue for larger production quotas
for each member of the cartel.
B) agree to a low cartel production
level and then produce more than its
quota.
C) abide by its individual production
quota.
D) support equal production quotas
for each member.
