Answers needed in 1 HOUR!!! (Economics)

There is no flexiability; answers are needed by 7:18 E.S.T.

 

24 multiple choice questions;  Economics 101. 

 

Questions are attached.

 

Que

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tion

: In a company that is experiencing economies of scale, which of the following is true? 

A

Average total cost is decreasing

B

Fixed cost is decreasing

C

Average marginal cost is decreasing

D

Marginal cost is higher than average marginal cost

 

Question: What is the definition of market equilibrium? 

A

The price at which elasticity of demand is unit elastic

B

The price and quantity at which all consumer surplus is extracted from buyers

C

The price at which quantity supplied equals quantity demanded

D

All of the above

 

Question: It costs your company $200 to produce pens and pencils together. To produce the same amount of pens and pencils separately costs $

10

0 for the pens and $120 for the pencils. The production of pens and pencils exhibits 

A

Diseconomies of scope

B

Economies of scope

C

Increasing returns to scale

D

Constant returns to scale

 

Question: Management at the East Alabama Motor Speedway estimates that the “Friday Night Fanatics” would continue to enthusiastically pack the house (every ticket would be sold) even after a 35% increase in the price of admission. Apparently, the E.A.M.S is operating in the ______ portion of their ______ curve. 

A

Inelastic, supply

B

Elastic, supply

C

Inelastic, demand

D

Elastic, demand

 

Question: If a firm’s average cost is falling (economies of scale) with output, then 

A

Marginal cost is less than average cost

B

Marginal cost is rising

C

Marginal cost is greater than average cost

D

Average cost is rising as a function of output

Question: A company currently sells 60,000 units a month at $10 per unit. The variable cost per unit is $6. The company decided to raise the price about 10%. How much change in the number of units sold can the company afford and still be no worse off? 

A

– 48,000

B

– 12,000

C

– 8,000

D

+ 12,000

Question: A spirits manufacturer is considering two potential production investments.
Option A costs an initial $2 billion and will involve variable costs (labor and material) of $5 per bottle of spirits. Option B costs an initial $4 billion and will involve variable costs (labor and material) of $3 per bottle of spirits. Assuming an annual capital charge equal to 10 percent of the initial costs, what is the average fixed cost at production level of 20,000,000 bottles per year for the Option B facility? 

A

$3

B

$20

C

$

23

D

$10

 

A

Configuration A

B

Configuration B

C

Configuration C

D

None of the configurations

 

Question: The U.S. Government bought 112,000 acres of land in southeastern Colorado in 1968 for $17,500,000. The cost of using this land today exclusively for the reintroduction of the black-tailed prairie dog 

A

Is zero, because they already own the land

B

Is zero, because the land represents a sunk cost

C

Is equal to the market value of the land

D

Depends on the value to society of black-tailed prairie dogs

                                                   

 

  

Next Unanswered Question: 11 

Question: If a firm is earning an abnormally high rate of return on invested capital 

A

The firm is earning positive economic profits

B

The firm has zero economic profits

C

The firm’s accounting and economic profits are equal

D

The firm’s accounting profits are zero

Question: The fixed cost of Boeing’s new aircraft, the 797, is $6 billion. The average variable cost is $100,000,000. The sales price is $ 140,000,000. What is the projected breakeven volume? 

A

100

B

125

C

150

D

175

 

Question: Which of the following would be considered an extent decision? 

A

A business is considering diversifying into a new line of business

B

A business is considering shutting down operations

C

A business is considering the sale of an underperforming line of business

D

A business manager is trying to decide how many workers to hire for a new line of business

 

Question: You run a small auto service shop. Your fixed expenses per week are $1,000 and your average customer invoice is $500 with an associated marginal cost of $300. What is your weekly breakeven quantity? 

A

2 cars

B

3.33 cars

C

5 cars

D

10 cars

Question: Which of the following will NOT cause the demand curve for turkey meat to shift? 

A

Rising chicken and pork prices

B

Recent news indicating cancer-fighting properties of turkey meat

C

Sudden decrease in price

D

Thanksgiving

Question: Dr. Octavio is an ophthalmologist who performs both cataract and LASIK surgeries. If a competitor starts offering LASIK surgery as well, causing a decrease in the price Dr. Octavio can charge for LASIK, this price decrease 

A

Increases the opportunity cost of performing cataract surgeries

B

Increases the demand for LASIK surgery

C

Reduces the opportunity cost of performing cataract surgeries

D

Increases the demand for cataract surgeries, if cataract and LASIK surgeries are substitutes

Question: Which of the following statements is true? 

A

A firm’s accounting costs are the same as its economic costs if the firm is earning a normal rate of return

B

A firm’s accounting costs are larger than its economic costs

C

A firm’s accounting costs take account of implicit costs of capital

D

A firm’s accounting costs are smaller than its economic costs

 

Question: A brewery is considering two potential production investments.
Option A costs an initial $2 million and will involve constant marginal cost of $5
Option B costs an initial $4 million and will involve constant marginal cost of $3
In order to make the calculations simple, assume that the annual capital cost is 10% of the total investment. At what production quantity per year would the brewery be indifferent between these two investment opportunities? 

A

20,000

B

100,000

C

200,000

D

150,000

 

Question: Smitty’s Hot Boiled Peanuts recently reported that its revenue increased from the previous quarter along with its profits. What is the most likely explanation for this change if the only change Smitty’s made was in its price? 

A

Price decreased and demand was inelastic

B

Price increased and demand was inelastic

C

Demand was unit elastic

D

Price increased and demand was elastic

Question: As a shoe company produces more shoes, the average total cost of each shoe produced decreases. This is because 

A

Total fixed costs are decreasing as more shoes are produced

B

Average variable cost is decreasing as more shoes are produced

C

There are scale economies

D

Total variable cost is decreasing as more shoes are produced

 

Question: In the long run, which of the following outcomes is most likely for a firm? 

A

Zero accounting profits but positive economic profits

B

Zero accounting profits

C

Positive accounting profits and positive economic profits

D

Zero economic profits but positive accounting profits

Question: Which of the following would most likely make the demand for an item more elastic? 

A

Buyers perceive there to be few close substitutes for the item

B

The item represents a small fraction of consumers’ budgets

C

There are no costs of switching to competitors’ products

D

Buyers have NOT had time to adjust to the price change

Question: Christine has purchased five bananas and is considering the purchase of a sixth. It is likely she will purchase the sixth banana if 

A

The marginal value she gets from the sixth banana is lower than its price

B

The marginal benefit of the sixth banana exceeds its price

C

The average value of the sixth banana exceeds the price

D

The total personal value of six bananas exceeds the total expenditure to purchase six bananas

                                                   

 

  

Next Unanswered Question: 24 

 

Question: A company currently sells 60,000 units a month at $10 per unit. The marginal cost is constant at $6 up to 100,000 units per month. The company is considering raising the price by 10% to $11. If the price elasticity of demand is constant and ______ in that price range, then profits would increase if they raise the price to $11. 

A

Equal to -3.0

B

Equal to -2.8

C

Equal to -2.6

D

Equal to -2.4

E

None of the above

 

Question: When demand for a product falls, which of the following events would you NOT necessarily expect to occur? 

A

A decrease in the quantity of the product supplied

B

A decrease in its price

C

A decrease in the supply of the product

D

A leftward shift of the demand curve

23

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