question
A buyer values a house at $525,000 and a seller values the same house at $485,000. If sales tax is 8% and is levied on the seller, then what would be the lowest price that the seller would be willing to sell at?
$527,174
$525,000
$523,800
$485,000
$527,174
$525,000
$523,800
$485,000
answer
$527, 174
question
A business incurs the following costs per unit: Labor $125/unit; Materials $45/unit and rent $250,000/month. If the firm produces 1,000,000 units a month, the total variable costs equal
$125 Million
$45 Million
$1 Million
$170 Million
$125 Million
$45 Million
$1 Million
$170 Million
answer
$170 Million
question
Comfy Clothing is thinking of hiring Tom. If hired, he can increase total production by 100 units a week. He would cost the firm $1,500 a week in wages. If the price of each unit is $20,
The MR of hiring Tom is $2,000
The MC of hiring Tom is $1,500
The firm should hire Tom since MR>MC
All of the above
The MR of hiring Tom is $2,000
The MC of hiring Tom is $1,500
The firm should hire Tom since MR>MC
All of the above
answer
All of the above
question
Contribution margin is:
the contribution of each unit sold towards covering the fixed costs
the contribution of each unit sold towards covering the variable costs
the contribution of each unit sold towards covering the average variable costs
All of the above
the contribution of each unit sold towards covering the fixed costs
the contribution of each unit sold towards covering the variable costs
the contribution of each unit sold towards covering the average variable costs
All of the above
answer
the contribution of each unit sold towards covering the fixed costs.
question
In general, the smaller the price elasticity:
the smaller the responsiveness of price to changes in quantity.
the smaller the responsiveness of quantity to changes in price.
the larger the responsiveness of price to changes in quantity.
the larger the responsiveness of quantity to changes in price.
the smaller the responsiveness of price to changes in quantity.
the smaller the responsiveness of quantity to changes in price.
the larger the responsiveness of price to changes in quantity.
the larger the responsiveness of quantity to changes in price.
answer
the smaller the responsiveness of quantity to change in price.
question
The government decided to reduce taxes on fast-food to increase revenue. The government assumes that fast-food products have
An inelastic demand
An elastic demand
A demand curve that is upward sloping
Unitary elastic demand curve
An inelastic demand
An elastic demand
A demand curve that is upward sloping
Unitary elastic demand curve
answer
an elastic demand.
question
The change in any factor other than ________ would shift the demand curve:
Weather
interest rate
Price
all of the above
Weather
interest rate
Price
all of the above
answer
Price
question
Which of the following factors would shift the supply curve for ice cream to the right?
a new and more efficient refrigeration technology emerges
the sales price per unit increases
the number of producers in the market for ice cream increases
Both A&C
a new and more efficient refrigeration technology emerges
the sales price per unit increases
the number of producers in the market for ice cream increases
Both A&C
answer
Both A&C
question
Which of the following would shift the supply of Florida Oranges to the left?
a hurricane in Florida destroying a major part of the crop
an increase in the price of water per unit, a major input, used to irrigate the orange trees
one of the larger orange growers decides to shut down for the forseable future
all of the above
a hurricane in Florida destroying a major part of the crop
an increase in the price of water per unit, a major input, used to irrigate the orange trees
one of the larger orange growers decides to shut down for the forseable future
all of the above
answer
all of the above
question
If potatoes are inferior goods, which of the following will increase the demand for potatoes?
Increase in the price of a complement
Decrease in income
Decrease in the price of a substitute
Increase in income
Increase in the price of a complement
Decrease in income
Decrease in the price of a substitute
Increase in income
answer
Decrease in income.
question
Which of the following statements describes the presence of diminishing returns? All else equal,
Marginal product is constant as output increases
Marginal product is falling as output increases
Marginal product is rising as output increases
Marginal product is zero
Marginal product is constant as output increases
Marginal product is falling as output increases
Marginal product is rising as output increases
Marginal product is zero
answer
Marginal product is falling as output increases.
question
According to the indifference principle, housing prices:
tend to converge over time
tend to leave individuals indifferent about where they live
only tend to be different to compensate individuals for differences in living conditions
Answers B & C only
tend to converge over time
tend to leave individuals indifferent about where they live
only tend to be different to compensate individuals for differences in living conditions
Answers B & C only
answer
Answers B & C only
question
The main reason(s) that monopolies may be able to earn positive economic profits for a relatively long period of time is(are):
assets cannot quickly move in and out of the industry when demand fluctuates
an increase in demand does not lead to the entry of new firms into the industry to absorb the extra demand
both A&B
none of the above
assets cannot quickly move in and out of the industry when demand fluctuates
an increase in demand does not lead to the entry of new firms into the industry to absorb the extra demand
both A&B
none of the above
answer
both A&B
question
Intense market competition is ________ for producers, since it_______.
Bad; erodes consumer surplus
Bad, erodes producer profits
Good, increases the price level in the market
Good; decreases the price level in the market
Bad; erodes consumer surplus
Bad, erodes producer profits
Good, increases the price level in the market
Good; decreases the price level in the market
answer
Bad, erodes producer profits.
question
Industries with high barriers to entry:
Pushes profits to normal returns
Increases the likelihood of firms entering the industry
Help firms sustain long term profits
Increases the number of competitors
Pushes profits to normal returns
Increases the likelihood of firms entering the industry
Help firms sustain long term profits
Increases the number of competitors
answer
help firms sustain long term profits.
question
The five forces model is a framework:
For increasing buyer power in the market
For improving competition in the industry
For analyzing the attractiveness of an industry
For increasing supplier power in the market
For increasing buyer power in the market
For improving competition in the industry
For analyzing the attractiveness of an industry
For increasing supplier power in the market
answer
for analyzing the attractiveness of an industry.
question
Holding other things constant, a depreciation of the US Dollar relative to the Kenyan Shilling would cause the demand for the Shilling to _____________ and the supply for Shilling to __________.
Increase; decrease
Increase, increase
Decrease; Increase
Decrease; Decrease
Increase; decrease
Increase, increase
Decrease; Increase
Decrease; Decrease
answer
decrease; increase.
question
An American consumer wants to buy a Swiss watch. The exchange rate is 1USD=0.89 CHF(Swiss Francs). The watch costs 100 Swiss Francs. How much would it cost him in dollars?
$89
$112.36
$100
$160.82
$89
$112.36
$100
$160.82
answer
$112.36.
question
Currency devaluation ______export producers because_______
Helps; exports are more expensive
Hurts; exports are more expensive
Helps; exports are less expensive
Hurts; exports are less expensive
Helps; exports are more expensive
Hurts; exports are more expensive
Helps; exports are less expensive
Hurts; exports are less expensive
answer
helps; exports are less expensive
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