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question 1 framjam sports equipment produces basketballs at its factory in kentucky 3620977

Question 1
Framjam Sports Equipment produces basketballs at its factory in Kentucky and soccer balls at its factory in Illinois. At its current annual rate of production, the cost of producing soccer balls is $75,000 and the cost of producing basketballs is $35,000. If the firm consolidates production at a single location, the annual cost of production will be $100,000. What is the degree of economies of scope in this case?
Select one:
A. 4
B. 5
C. 0.90
D. 0.10
E. 1.15
Question 2
Trudeau's Body Shop incurs total costs given by TC = 2,400 + 100Q. If the price it charges for a paint job is $120, what is its break-even level of output?
Select one:
A. 20 paint jobs
B. 40 paint jobs
C. 60 paint jobs
D. 90 paint jobs
E. 120 paint jobs
Question 3
N
 

In the above figure, if price is equal to P1, the firm will
Select one:
A. shut down.
B. earn positive economic profits.
C. incur an economic loss.
D. earn zero economic profits.

 

Question 4
The per-week demand for use of the Golden Gate Bridge in San Francisco is P = 13 – 0.15Q during peak traffic periods and P = 10 – 0.1Q during off-peak hours, where Q is the number of cars crossing the bridge in thousands and P is the toll in dollars. If the marginal congestion cost of using the bridge is MC = 5 + 0.2Q, what is the optimal peak load toll for crossing the bridge?
Select one:
A. 6.5
B. 8.0
C. 8.7
D. 9.9
E. 10.6

 

Question 5
The long-run average cost curve slopes upward if there are:
Select one:
A. some factors without diminishing marginal returns
B. diseconomies of scope in the management of multiplant operations
C. economies of scale
D. diseconomies of scale
E. no factors without diminishing marginal returns

 

 

Question 6
The long run is a time period during which:
Select one:
A. all inputs are semivariable
B. all inputs except capital and entrepreneurship are variable
C. average variable costs are strictly less than average total cost
D. all inputs are quasi-variable
E. all inputs are variable

 

 

Question 7
Average variable cost is equal to the:
Select one:
A. change in total variable cost divided by the change in output levels
B. total variable cost divided by the level of output
C. marginal cost divided by the average product of the variable input
D. marginal cost divided by the marginal product of the variable input
E. total variable cost divided by the change in output levels

 

 

 

 

Question 8
The addition to total cost resulting from the addition of the last unit of output is known as:
Select one:
A. marginal product
B. average product
C. average variable cost
D. average total cost
E. marginal cost

 

Question 9
An example of implicit costs is the:
Select one:
A. bad-debt liabilities arising out of excessive sales on credit
B. wages paid to the owners' children
C. opportunity cost of owner-supplied capital and labor that is not recognized by accountants
D. prices paid for purchased inputs
E. the alternative uses for money that could be borrowed

 

 

Question 10
Economies of scope exist when it is cheaper to produce:
Select one:
A. with a large fixed plant and equipment
B. at increasing rates of output
C. given quantities of two different products together than to produce the same quantities separately
D. given quantities of two different products separately than to produce the same quantities together
E. using more than one technique

 

 

 

 

 

Question 11
The long-run average cost curve slopes downward if there are:
Select one:
A. some factors without diminishing marginal returns
B. economies of scope in the management of multiplant operations
C. economies of scale
D. diseconomies of scope in the management of multiplant operations
E. no factors without diminishing marginal returns

Question 12
Short-run marginal cost eventually increases with increasing output because:
Select one:
A. eventually marginal returns will diminish
B. not all variable inputs increase at the same rate
C. diseconomies of scale usually set in immediately
D. of diseconomies of scope
E. eventually diseconomies of scale set in

 

 

Question 13
If a firm is choosing cost minimizing combinations of inputs, marginal cost can be defined as the price of any:
Select one:
A. input divided by its average product
B. variable input divided by its average product
C. fixed input divided by its average product
D. variable input divided by its marginal product
E. fixed input divided by its marginal product

 

Question 14
When average total cost is at its minimum:
Select one:
A. average variable cost is declining with increases in output
B. average variable cost plus average fixed cost is declining with increases in output
C. average total cost is equal to average variable cost
D. marginal cost is equal to average variable cost
E. marginal cost is equal to average total cost
Question 15
In the short run, perfectly-competitive firms may earn:
Select one:
A. Positive economic profit.
B. abnormal profit.
C. Negative economic profit.
D. Positive, negative or zero economic profit.

 

Question 16
In the model of perfect competition, there are:
Select one:
A. high barriers to entry and no nonprice competition
B. low barriers to entry and some advertising and product differentiation
C. very high barriers to entry and some advertising and product differentiation
D. high barriers to entry and some advertising and product differentiation
E. low barriers to entry and no nonprice competition

 

 

Question 17
If price is above the average variable cost but below the average total cost of a representative firm in a competitive industry:
Select one:
A. there will be entry to the industry over time
B. there will be exit from the industry over time
C. the firms in the industry are just earning a normal rate of return
D. the firms in the industry are earning a supranormal rate of return
E. the industry is in long-run equilibrium

 

 

Question 18
If a typical firm in a perfectly-competitive industry is earning a
negative economic profit, then we can expect:
Select one:
A. Some firms to exit the industry.
B. The market price of the product to fall.
C. The market supply curve to shift to the right.
D. Some firms to enter the industry.

Question 19
A profit-maximizing perfectly-competitive firm will shut down when:
Select one:
A. p
B. P
C. P
D. P

Question 20
A perfectly competitive firm will maximize profits when
Select one:
A. marginal cost is equal to marginal revenue.
B. average cost is greater than marginal revenue.
C. average cost is equal to average revenue.
D. marginal cost is greater than marginal revenue.

Question 21
A firm operating in a perfectly-competitive industry faces a demand
that is:

Select one:
A. Vertical.
B. Horizontal.
C. Downward sloping.
D. Upward sloping.

 

Question 22
In the model of perfect competition, firms maximize profits by producing where:
Select one:
A. the difference between marginal revenue and marginal cost is maximized
B. marginal revenue equals price
C. the difference between price and marginal cost is maximized
D. price equals marginal cost
E. the difference between price and marginal revenue is maximized

 

Question 23
The ABC Company estimates that a newspaper advertising campaign would cost $25,000 and would generate $35,000 in new revenues. The firm should begin this campaign as long as:
Select one:
A. price elasticity of demand is at least 2.5 (in absolute value)
B. price elasticity of supply is 1
C. price elasticity of demand is at least 1.4 (in absolute value)
D. marginal cost of production is no more than $25,000
E. price elasticity of supply is 1.4

 

 

Question 24
So long as price exceeds average variable cost, in the model of monopolistic competition, a firm maximizes profits by producing where:
Select one:
A. the difference between marginal revenue and marginal cost is maximized
B. marginal cost equals marginal revenue
C. marginal revenue equals price
D. the difference between price and marginal cost is maximized
E. price equals marginal cost

 

Question 25
When producing 10 units, Jean has total variable costs of $100, total fixed costs of $100, and assets of $100. She wants a return of 10 percent. What price should she charge?
Select one:
A. $11
B. $21
C. $30
D. $210
E. $300

Question 26
Compared to perfectly competitive firms, the demand curve for a monopolist will be
Select one:
A. perfectly elastic.
B. more elastic.
C. less elastic.
D. as elastic.

 

 

Question 27
Firms advertise in order to:
Select one:
A. build brand loyalty
B. appeal to the price-sensitive consumers
C. increase the demand elasticities of their loyal customers
D. shift the market supply curve to the left
E. shift the market demand curve to the left

 

Question 28
If elasticity of demand is -2, marginal cost is $4, and average cost is $6, a profit-maximizing markup price is:
Select one:
A. $4
B. $6
C. $8
D. $10
E. $12

Question 29
In the model of monopolistic competition, there can be short-run:
Select one:
A. losses or profits, but there must be profits in long-run equilibrium
B. profits, but there must be losses in long-run equilibrium
C. losses or profits, but there must be losses in long-run equilibrium
D. losses or profits, but there must be neither profits nor losses in long-run equilibrium
E. losses, but there must be profits in long-run equilibrium

 

 

Question 30
When a movie theater charges a higher price during the evening than during the day, it is practicing:
Select one:
A. peak load pricing
B. first-degree price discrimination
C. second-degree price discrimination
D. third-degree price discrimination
E. fourth-degree price discrimination

 

 

 

Question 31
Women are often charged more than men for haircuts performed by the same haircutter. This is not considered price discrimination because:
Select one:
A. women receive more consumer surplus from haircuts than men receive
B. haircutters claim to spend more time on women's hair, raising the cost of the haircut to the firm
C. firms make up the extra cost to consumers by giving women free samples of products
D. men receive more consumer surplus from haircuts than women receive
E. women have a lower price elasticity of demand for haircuts

Question 32
When a monopolist requires a customer to pay an initial fee for the right to buy a product as well as a usage fee for each unit of the product bought, this is known as a(n):
Select one:
A. bundling contract
B. price differentiation
C. oligopolistic device
D. two-part tariff
E. maximizing device

 

 

Question 33

When a utility charges homeowners less than big industrial users, it is practicing:
Select one:
A. first-degree price discrimination
B. fourth-degree price discrimination
C. third-degree price discrimination
D. markup pricing
E. tying

 

 

Question 34
When Pan United Airlines gives a $400 fare discount to persons with student IDs, they are practicing:
Select one:
A. first-degree price discrimination
B. second-degree price discrimination
C. third-degree price discrimination
D. markup pricing
E. tying

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