Quiz #2 [MCQ | Chapters 13,17,18]

Question 1 of 60

1

Accounting profit is equal to total revenue minus

Select one of the following:

implicit costs.
variable costs.
the sum of implicit and explicit costs.
explicit costs.
marginal costs.

Explanation

Question 2 of 60

1

Economic profit is equal to total revenue minus

Select one of the following:

variable costs.
implicit costs.
explicit costs.
marginal costs.

Explanation

Question 3 of 60

1

Nicole owns a small pottery factory. She can make 1,000 pieces of pottery per year and sell them for €100 each. It costs Nicole €20,000 for the raw materials to produce the 1,000 pieces of pottery. She has invested €100,000 in her factory and equipment: €50,000 from her savings and €50,000 borrowed at 10 per cent. (Assume that she could have loaned her money out at 10 per cent, too.) Nicole can work at a competing pottery factory for €40,000 per year. The accounting profit at Nicole's pottery factory is

Select one of the following:

€30,000.
€35,000.
€75,000.
€70,000.
€80,000

Explanation

Question 4 of 60

1

Nicole owns a small pottery factory. She can make 1,000 pieces of pottery per year and sell them for €100 each. It costs Nicole €20,000 for the raw materials to produce the 1,000 pieces of pottery. She has invested €100,000 in her factory and equipment: €50,000 from her savings and €50,000 borrowed at 10 percent (assume that she could have loaned her money out at 10 percent, too). Nicole can work at a competing pottery factory for €40,000 per year. The economic profit at Nicole's pottery factory is

Select one of the following:

€80,000.
€30,000.
€75,000.
€70,000.
€35,000.

Explanation

Question 5 of 60

1

If there are implicit costs of production,

Select one of the following:

accounting profit will exceed economic profit.
economic profit will always be zero.
economic profit will exceed accounting profit.
accounting profit will always be zero.
economic profit and accounting profit will be equal.

Explanation

Question 6 of 60

1

If a production function exhibits diminishing marginal product, its slope

Select one of the following:

is linear (a straight line).
becomes steeper as the quantity of the input increases.
could be any of these answers.
becomes flatter as the quantity of the input increases.

Explanation

Question 7 of 60

1

If a production function exhibits diminishing marginal product, the slope of the corresponding total-cost curve

Select one of the following:

is linear (a straight line).
could be any of these answers.
becomes steeper as the quantity of output increases.
becomes flatter as the quantity of output increases.

Explanation

Question 8 of 60

1

The marginal product of labour as production moves from employing one worker to employing two workers is

Select one of the following:

10
0
23
40
17

Explanation

Question 9 of 60

1

The production process described above exhibits

Select one of the following:

constant marginal product of labour.
diminishing marginal product of labour.
increasing returns to scale.
increasing marginal product of labour.
decreasing returns to scale.

Explanation

Question 10 of 60

1

Which of the following is a variable cost in the short run?

Select one of the following:

rent on the factory
wages paid to factory labour
interest payments on borrowed financial capital
payment on the lease for factory equipment
salaries paid to upper management

Explanation

Question 11 of 60

1

The average fixed cost of producing four units is

Select one of the following:

€2.50.
€26.
none of these answers.
€10.
€5.

Explanation

Question 12 of 60

1

The average total cost of producing three units is

Select one of the following:

€28.
€6.
€3.33.
€18.
€9.33.

Explanation

Question 13 of 60

1

The marginal cost of changing production from three units to four units is

Select one of the following:

€7.
€5
€8.
€9.
€6.

Explanation

Question 14 of 60

1

The efficient scale of production is:

Select one of the following:

two units.
three units.
one unit.
five units.
four units.

Explanation

Question 15 of 60

1

When marginal costs are below average total costs,

Select one of the following:

average fixed costs are rising.
average total costs are falling.
average total costs are rising.
average total costs are minimized.

Explanation

Question 16 of 60

1

If marginal costs equal average total costs,

Select one of the following:

average total costs are falling.
average total costs are rising.
average total costs are maximized.
average total costs are minimized.

Explanation

Question 17 of 60

1

If, as the quantity produced increases, a production function first exhibits increasing marginal product and later diminishing marginal product, the corresponding marginal-cost curve will

Select one of the following:

be flat (horizontal).
slope upward.
slope downward.
be U-shaped.

Explanation

Question 18 of 60

1

In the long run, if a very small factory were to expand its scale of operations, it is likely that it would initially experience

Select one of the following:

an increase in average total costs.
diseconomies of scale.
economies of scale.
constant returns to scale.

Explanation

Question 19 of 60

1

The efficient scale of production is the quantity of output that minimizes

Select one of the following:

average fixed cost.
average total cost.
average variable cost.
marginal cost.

Explanation

Question 20 of 60

1

Which of the following statements is true?

Select one of the following:

All costs are fixed in the short run.
All costs are variable in the long run.
All costs are variable in the short run.
All costs are fixed in the long run.

Explanation

Question 21 of 60

1

The market for hand tools (such as hammers and screwdrivers) is dominated by Draper, Stanley, and Craftsman. This market is best described as

Select one of the following:

monopolistically competitive.
a monopoly.
an oligopoly.
competitive.

Explanation

Question 22 of 60

1

A market structure in which many firms sell products that are similar but not identical is known as

Select one of the following:

monopolistic competition.
monopoly.
perfect competition.
oligopoly.

Explanation

Question 23 of 60

1

If oligopolists engage in collusion and successfully form a cartel, the market outcome is

Select one of the following:

the same as if it were served by competitive firms.
efficient because cooperation improves efficiency.
the same as if it were served by a monopoly.
known as a Nash equilibrium.

Explanation

Question 24 of 60

1

Suppose an oligopolist individually maximizes its profits. When calculating profits, if the output effect exceeds the price effect on the marginal unit of production, then the oligopolist

Select one of the following:

should produce more units.
has maximized profits.
is in a Nash equilibrium.
should produce fewer units.
should exit the industry.

Explanation

Question 25 of 60

1

As the number of sellers in an oligopoly grows larger, an oligopolistic market looks more like

Select one of the following:

monopoly.
a competitive market.
monopolistic competition.
a collusion solution.

Explanation

Question 26 of 60

1

When an oligopolist individually chooses its level of production to maximize its profits, it produces an output that is

Select one of the following:

more than the level produced by a monopoly and less than the level produced by a competitive market.
less than the level produced by a monopoly and more than the level produced by a competitive market.
less than the level produce by either monopoly or a competitive market.
more than the level produced by either monopoly or a competitive market.

Explanation

Question 27 of 60

1

When an oligopolist individually chooses its level of production to maximize its profits, it charges a price that is

Select one of the following:

more than the price charged by either monopoly or a competitive market.
less than the price charged by either monopoly or a competitive market.
more than the price charged by a monopoly and less than the price charged by a competitive market.
less than the price charged by a monopoly and more than the price charged by a competitive market.

Explanation

Question 28 of 60

1

As the number of sellers in an oligopoly increases,

Select one of the following:

output in the market tends to fall because each firm must cut back on production.
the price in the market moves further from marginal cost.
collusion is more likely to occur because a larger number of firms can place pressure on any firm that defects.
the price in the market moves closer to marginal cost.

Explanation

Question 29 of 60

1

A situation in which oligopolists interacting with one another each choose their best strategy given the strategies that all the other oligopolists have chosen is known as a

Select one of the following:

Nash equilibrium.
dominant strategy.
cartel.
collusion solution.

Explanation

Question 30 of 60

1

Under competition, the price and quantity in this market would be

Select one of the following:

$8; 800
$6; 1.200
$4; 1.600
$2; 2.000
$0; 2.400

Explanation

Question 31 of 60

1

If the duopolists in this baseball market collude and successfully form a cartel, what is the price that each should charge in order to maximize profits?

Select one of the following:

$8
$7
$6
$5
$4

Explanation

Question 32 of 60

1

If the duopolists in this baseball market collude and successfully form a cartel, how much profit will each earn?

Select one of the following:

$2.700
$3.200
$3.500
$3.600
$7.200

Explanation

Question 33 of 60

1

If the duopolists are unable to collude, how much profit will each earn when the market reaches a Nash equilibrium?

Select one of the following:

$2.700
$3.200
$3.500
$3.600
$7.200

Explanation

Question 34 of 60

1

The dominant strategy for Sue and Joe is for

Select one of the following:

both to be open for many hours
both to be open for a few hours
Sue to be open for many hours while Joe is open for few hours
Sue to be open for few hours while Joe is open for many hours
There is no dominant strategy in this prisoners' dilemma game

Explanation

Question 35 of 60

1

Suppose Sue and Joe agreed to collude and jointly maximize their profits. If Sue and Joe were to be able to repeatedly play the game shown earlier and they agreed on a penalty for defecting from their agreement, what is the likely outcome of the game?

Select one of the following:

Both are open for many hours
Both are open for a few hours
Sue is open for many hours while Joe is open for few hours
Sue is open for few hours while Joe is open for many hours

Explanation

Question 36 of 60

1

Many economists argue that resale price maintenance

Select one of the following:

is price fixing and therefore is prohibited by law
Enhance the market power of the producer
Has a legitimate purpose of stopping discount retailers from free riding on the services provided by full-service retailers
Both A and B

Explanation

Question 37 of 60

1

Collusion is difficult for an oligopoly to maintain

Select one of the following:

Because antitrust laws make collusion illegal
Because in the case of oligopoly, self-interest is in conflict with cooperation
If additional firms enter of the oligopoly
For all of the above reasons

Explanation

Question 38 of 60

1

If ABC Publishing charges separate prices for both products, its best strategy is to charge prices that, when combined, total

Select one of the following:

$60
$75
$80
$85
$90

Explanation

Question 39 of 60

1

If ABC Publising engages in tying, its best strategy is to charge a combined price of:

Select one of the following:

$60
$75
$80
$85
$90

Explanation

Question 40 of 60

1

Laws that make it illegal for firms to conspire to raise prices of reduce production are known as

Select one of the following:

Pro-competition laws
Antitrust laws
Antimonopoly laws
Anticollusion laws
All of the above

Explanation

Question 41 of 60

1

The most important factors of production are

Select one of the following:

labour, land, and capital.
water, earth, and knowledge.
money, stocks, and bonds.
management, finance, and marketing.

Explanation

Question 42 of 60

1

If a factor exhibits diminishing marginal product, hiring additional units of the factor will

Select one of the following:

cause a reduction in output.
have no effect on output.
increase the marginal product of the factor.
generate ever smaller amounts of output.

Explanation

Question 43 of 60

1

What is the marginal product of labour as the firm moves from using three workers to using four workers?

Select one of the following:

14
0
none of these answers
2
12

Explanation

Question 44 of 60

1

If the price of output is €4 per unit, what is the value of the marginal product of labour as the firm moves from using four workers to using five workers?

Select one of the following:

€60
€4
€12
€8
€56

Explanation

Question 45 of 60

1

If this profit-maximizing firm sells its output in a competitive market for €3 per unit and hires labour in a competitive market for €8/hour, then this firm should hire

Select one of the following:

four workers.
three workers.
two workers.
five workers.
one worker.

Explanation

Question 46 of 60

1

The value of the marginal product of labour is

Select one of the following:

the price of the output times the wage of labour.
the price of the output times the marginal product of labour.
none of these answers.
the wage of labour times the quantity of labour.
the wage of labour times the marginal product of labour.

Explanation

Question 47 of 60

1

For a competitive, profit-maximizing firm, the value-of-the-marginal-product curve for capital is the firm's

Select one of the following:

supply curve of capital.
demand curve for capital.
production function.
marginal cost curve.

Explanation

Question 48 of 60

1

An increase in the supply of labour

Select one of the following:

increases the value of the marginal product of labour and decreases the wage.
decreases the value of the marginal product of labour and decreases the wage.
decreases the value of the marginal product of labour and increases the wage.
increases the value of the marginal product of labour and increases the wage.

Explanation

Question 49 of 60

1

A decrease in the demand for fish

Select one of the following:

decreases the value of the marginal product of fishermen, reduces their wage, and reduces employment in the fishing industry.
increases the value of the marginal product of fishermen, increases their wage, and increases employment in the fishing industry.
decreases the value of the marginal product of fishermen, reduces their wage, and increases employment in the fishing industry.
increases the value of the marginal product of fishermen, increases their wage, and decreases employment in the fishing industry.

Explanation

Question 50 of 60

1

What will a decrease in the supply of fishermen do to the market for capital employed in the fishing industry?

Select one of the following:

increase the demand for fishing boats and decrease rental rates on fishing boats
decrease the demand for fishing boats and increase rental rates on fishing boats
decrease the demand for fishing boats and decrease rental rates on fishing boats
increase the demand for fishing boats and increase rental rates on fishing boats

Explanation

Question 51 of 60

1

An increase in the demand for apples will cause all but which of the following?

Select one of the following:

a decrease in the number of apple pickers employed
an increase in the value of the marginal product of apple pickers
an increase in the price of apples
an increase in the wage of apple pickers

Explanation

Question 52 of 60

1

A decrease in the supply of farm tractors will cause all but which of the following?

Select one of the following:

an increase in the rental rate for tractors
a decrease in the rental rate of farmland
an increase in the value of the marginal product of tractors
an increase in the wage of farm workers

Explanation

Question 53 of 60

1

If both input and output markets are competitive and firms are profit maximizing, then in equilibrium each factor of production earns

Select one of the following:

an amount equal to the price of output times total output.
the amount allocated by the political process.
an equal share of output.
the value of its marginal product.

Explanation

Question 54 of 60

1

An individual firm's demand for a factor of production

Select one of the following:

slopes downward because an increase in the production of output reduces the price at which the output can be sold in a competitive market, thereby reducing the value of the marginal product as more of the factor is used.
slopes downward due to the factor's diminishing marginal product.
slopes upward due to the factor's increasing marginal product.
is perfectly elastic (horizontal) if the factor market is perfectly competitive.

Explanation

Question 55 of 60

1

An increase in the demand for a firm's output

Select one of the following:

decreases the prosperity of the firm but increases the prosperity of the factors hired by the firm.
decreases the prosperity of both the firm and the factors hired by the firm.
increases the prosperity of both the firm and the factors hired by the firm.
increases the prosperity of the firm but decreases the prosperity of the factors hired by the firm.

Explanation

Question 56 of 60

1

A competitive, profit-maximizing firm should hire workers up to the point where

Select one of the following:

the wage, the rental price of capital, and the rental price of land are all equal.
the marginal product of labour equals zero and the production function is maximized.
the value of the marginal product of labour equals the wage.
the marginal product of labour equals the wage.

Explanation

Question 57 of 60

1

Which of the following is not true with regard to workers who have a high value of marginal product?

Select one of the following:

have skills that are in relatively scarce supply.
produce output for which there is great demand.
usually have little capital with which to work.
are usually highly paid.

Explanation

Question 58 of 60

1

An increase in the price of automobiles shifts the demand for autoworkers to the

Select one of the following:

left and decreases the wage.
right and decreases the wage.
right and increases the wage.
left and increases the wage.

Explanation

Question 59 of 60

1

When capital is owned by the firm as opposed to being directly owned by households, capital income may take any of the following forms except

Select one of the following:

interest.
dividends.
increases in stocks of goods.
retained earnings.

Explanation

Question 60 of 60

1

Suppose that a war is fought with biological weapons. The weapons destroy people but not capital. What is likely to happen to equilibrium wages and rental rates after the war when compared to their values before the war?

Select one of the following:

Wages rise and rental rates fall.
Wages rise and rental rates rise.
Wages fall and rental rates rise.
Wages fall and rental rates fall.

	Created by Good Guy Beket over 5 years ago

Hell on Earth Economics [Teacher: Abdinova Makpal ; Final Exam + Quizzes] ▼ (Quizzes #2 & #3 [Chapters 1-3, 4-6, 13-17-18, 23-24]) Quiz on Quiz #2 [MCQ | Chapters 13,17,18], created by Good Guy Beket on 02/12/2018.

Quiz #2 [MCQ | Chapters 13,17,18]

Question 1 of 60

Accounting profit is equal to total revenue minus

Select one of the following:

Explanation

Question 2 of 60

Economic profit is equal to total revenue minus

Select one of the following:

Explanation

Question 3 of 60

Select one of the following:

Explanation

Question 4 of 60

Select one of the following:

Explanation

Question 5 of 60

If there are implicit costs of production,

Select one of the following:

Explanation

Question 6 of 60

If a production function exhibits diminishing marginal product, its slope

Select one of the following:

Explanation

Question 7 of 60

If a production function exhibits diminishing marginal product, the slope of the corresponding total-cost curve

Select one of the following:

Explanation

Question 8 of 60

The marginal product of labour as production moves from employing one worker to employing two workers is

Select one of the following:

Explanation

Question 9 of 60

The production process described above exhibits

Select one of the following:

Explanation

Question 10 of 60

Which of the following is a variable cost in the short run?

Select one of the following:

Explanation

Question 11 of 60

The average fixed cost of producing four units is

Select one of the following:

Explanation

Question 12 of 60

The average total cost of producing three units is

Select one of the following:

Explanation

Question 13 of 60

The marginal cost of changing production from three units to four units is

Select one of the following:

Explanation

Question 14 of 60

The efficient scale of production is:

Select one of the following:

Explanation

Question 15 of 60

When marginal costs are below average total costs,

Select one of the following:

Explanation

Question 16 of 60

If marginal costs equal average total costs,

Select one of the following:

Explanation

Question 17 of 60

If, as the quantity produced increases, a production function first exhibits increasing marginal product and later diminishing marginal product, the corresponding marginal-cost curve will

Select one of the following:

Explanation

Question 18 of 60

In the long run, if a very small factory were to expand its scale of operations, it is likely that it would initially experience

Select one of the following:

Explanation

Question 19 of 60

The efficient scale of production is the quantity of output that minimizes

Select one of the following:

Explanation

Question 20 of 60

Which of the following statements is true?

Select one of the following:

Explanation