question
If the demand for product X is inelastic, a 4 percent increase in the price of X will:
A. increase the quantity of X demanded by less than 4 percent.
B. decrease the quantity of X demanded by more than 4 percent.
C. increase the quantity of X demanded by more than 4 percent.
D. decrease the quantity of X demanded by less than 4 percent.
A. increase the quantity of X demanded by less than 4 percent.
B. decrease the quantity of X demanded by more than 4 percent.
C. increase the quantity of X demanded by more than 4 percent.
D. decrease the quantity of X demanded by less than 4 percent.
answer
D
question
Answer the question on the basis of the accompanying table that shows average total costs (ATC) for a manufacturing firm whose total fixed costs are $10: Refer to the data. The total cost of producing 4 units of output is:
A. $31.
B. $124.
C. $87.
D. $137.
A. $31.
B. $124.
C. $87.
D. $137.
answer
B
question
The law of diminishing returns describes the:
A. relationship between resource inputs and product outputs in the short run.
B. profit-maximizing position of a firm.
C. relationship between total costs and total revenues.
D. relationship between resource inputs and product outputs in the long run.
A. relationship between resource inputs and product outputs in the short run.
B. profit-maximizing position of a firm.
C. relationship between total costs and total revenues.
D. relationship between resource inputs and product outputs in the long run.
answer
A
question
The more time consumers have to adjust to a change in price:
A. the greater will be the price elasticity of demand.
B. the more likely the product is a normal good.
C. the more likely the product is an inferior good.
D. the smaller will be the price elasticity of demand.
A. the greater will be the price elasticity of demand.
B. the more likely the product is a normal good.
C. the more likely the product is an inferior good.
D. the smaller will be the price elasticity of demand.
answer
A
question
Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year. If the firm sold 4,000 units of its output at $300 per unit, its accounting profits were:
A. zero and its economic loss was $200,000.
B. $200,000 and its economic profits were zero.
C. $100,000 and its economic profits were $100,000.
D. $100,000 and its economic profits were zero.
A. zero and its economic loss was $200,000.
B. $200,000 and its economic profits were zero.
C. $100,000 and its economic profits were $100,000.
D. $100,000 and its economic profits were zero.
answer
B
question
Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and has average variable costs of $150. The firm's total fixed costs are:
A. $5,000.
B. $0.50.
C. $50.
D. $500.
A. $5,000.
B. $0.50.
C. $50.
D. $500.
answer
A
question
In the short run the Sure-Screen T-Shirt Company is producing 500 units of output. Its average variable costs are $2.00 and its average fixed costs are $.50. The firm's total costs:
A. are $2.50.
B. are $1,100.
C. are $750.
D. are $1,250.
A. are $2.50.
B. are $1,100.
C. are $750.
D. are $1,250.
answer
D
question
Answer the question on the basis of the following cost data: Refer to the data. The marginal cost of the fifth unit of output is:
A. $3.
B. $80.
C. $78.
D. $62.
A. $3.
B. $80.
C. $78.
D. $62.
answer
B
question
Economic cost can best be defined as:
A. any contractual obligation that results in a flow of money expenditures from an enterprise to resource suppliers.
B. any contractual obligation to labor or material suppliers.
C. a payment that must be made to obtain and retain the services of a resource.
D. all costs exclusive of payments to fixed factors of production.
A. any contractual obligation that results in a flow of money expenditures from an enterprise to resource suppliers.
B. any contractual obligation to labor or material suppliers.
C. a payment that must be made to obtain and retain the services of a resource.
D. all costs exclusive of payments to fixed factors of production.
answer
C
question
A firm can sell as much as it wants at a constant price. Demand is thus:
A. perfectly inelastic.
B. perfectly elastic.
C. relatively inelastic.
D. relatively elastic.
A. perfectly inelastic.
B. perfectly elastic.
C. relatively inelastic.
D. relatively elastic.
answer
B
question
The demand for a luxury good whose purchase would exhaust a big portion of one's income is:
A. perfectly price inelastic.
B. perfectly price elastic.
C. relatively price inelastic.
D. relatively price elastic.
A. perfectly price inelastic.
B. perfectly price elastic.
C. relatively price inelastic.
D. relatively price elastic.
answer
D
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