ECN 601 Topic 4 Exam 1 (Multiple Choice)

1. Question:Theopportunity cost ofanactionis: 2. Question:Priceceilingscause: 3. Question:Acompanyinvested$400,000inatechnologythatreducedtheoverallcostsof production by reducing their cost per unit from $2 to $1.85. Later, amanagerhasanopportunitytooutsourceproductiontoanothercompanyatacostperunitof$1.75.Ifyouare themanager,you: 4. Question:Anincreaseinthepriceofacomplementshiftsthedemandcurvetothe: 5. Question:Afirmsells1,000unitsperweek.Itcharges$15perunit,theaveragevariablecostsare$10,andtheaveragefixedcostsare$25.Inthelongrun,thefirmshould: 6. Question:Amonopolisticallycompetitivefirm willtendtohavea moreelastic demandcurvethanamonopolistbecause: 7. Question:Inanoligopoly,firmswilltendtocompeteonthebasisofprice. 8. Question:Thegovernmentdecidedtoreducetaxesonfast-foodtoincreasetaxrevenue.Thegovernmentassumesthatfast-foodproductshave: 9. Question:Atapriceforwhichquantitydemandedexceedsquantitysupplied,a isexperienced,whichpushestheprice toward itsequilibriumvalue. 10. Question:Ingeneral,thesmallerthepriceelasticity: 11. Question:Abuyervaluesahouseat$525,000andasellervaluesthesamehouseat$485,000.Ifsalestaxis8%andisleviedontheseller,thenwhatwouldbethelowestpriceatwhichthesellerwouldbewillingtosell? 12. Question:Use the table provided to answer the following question. If the firm hires eightworkers,thetotalfixedcostsis: 13. Question:Use the table provided to answer the following question. If the firm hires fiveworkers,theaveragecostequals: 14. Question:Anexampleofapriceflooris: 15. Question:Amanagerinvests$20,000inequipmentthatwouldhelpthecompanyreduceit’sperunitcostsfrom$15to$12.Heexpectstheequipmenttobeinuseforthe next seven years. After two years, he realizes that if he outsourced theproduction, the unit cost would be $7 instead. At this point what should theseniormanagerdo? 16. Question:Acardealershipunionnegotiatesacontractthatdramaticallyincreasesthesalariesofallsalesmen.Ifoneofthesalesmenisthinkingofchangingcareerstobeahardware salesman,hisopportunitycost: 17. Question:Abusinessproduces5,000unitspermonth.Itspends$12,000onrawmaterials.Itpayswagesof$20,000.Othercostsinclude$50,000forrent,paid by the month. In order to break even, the selling price per unit will havetobe: 18. Question:Use the table provided to answer the following question. If hiring the fourthworkerincreasestotalproductby50unitsandthepriceofeachunitis$15: 19. Question:Thechangeinquantitydemandedderivedfromachangeinpriceis: 20. Question:Anincreaseinthepriceof asubstituteshiftsthedemandcurveto the: 21. Question:Which of the following factors would shift the supply curve for ice cream to theright? 22. Question:Usethetableprovidedtoanswerthefollowingquestion.Howmanyunitsshouldtheprofitmaximizingfirmproduce? 23. Question:Usethetableprovidedtoanswerthefollowingquestion.Whatisthemarginalrevenuefromproducingthefourth unit? 24. Question:Peter'sPizzeriasellsbothpizzasandsoda.Itwantstoincreasethesalesofitspizzas.Assumingthatthepizzaandthesodasarecomplements,whichofthesestrategiescanitemploy? 25. Question:If theprice elasticity ofdemandis 0.8 andthefirm increasesprice, revenuewill: 26. Question:The difference between the minimum price the producer is willing to acceptandtheprice the produceractuallyreceivesforaproductisreferredtoas: 27. Question:Whichofthefollowingdescribesafirm? 28. Question:Jimsawadecreaseinthequantitydemandedforhisfirm'sproductfrom8,000to6,000unitsperweekwhenheraisedthepriceoftheproductfrom$200to$250.WhatisJim'sownpriceelasticityofdemand? 29. Question:Afirmsells1,000unitsperweek.Itcharges$70perunit,theaveragevariablecostsare$25,andtheaveragefixedcostsare$65.Intheshortrun,thefirmshould: 30. Question:Ifthecross-priceelasticityofdemandbetweentwogoodsisnegative,then: