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19. Consider the graph on page 12. At which value(s) of Q will an activity take place because the marginal benefit exceeds the marginal cost?

a. Q1

b. Q2

c. Q3

d. All of the above

20. Which of the following combinations would suggest the closest fit with capitalism (as discussed in chapter 3)?

a. Prices determined by the market with some moral suasion.

b. Prices determined by the market with central planning

c. Central and indicative planning

d. A command system and low economic freedom

21. You would love to stay in bed this morning but you get up anyway and come to class. You decided

a. The marginal benefits of staying in bed exceeds the marginal cost of waking up.

b. The marginal benefits of staying in bed is less than the marginal cost.

c. The total benefits of staying in bed is less than the total cost.

d. You need to hear the class lecture and missing it is not worth a few extra hours of sleep.

e. Both b) and d) are correct.

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Trinidad Tremblay
Trinidad TremblayLv2
14 Mar 2018
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Related questions


Economics is the study of

A. production methods.

B. how society manages its scarce resources.

C. how households decide who performs which tasks.

D. the interaction of business and government.

Point Value: 1

2
When computing the opportunity cost of attending a concert you should include

A. the price you pay for the ticket and the value of your time.

B. the price you pay for the ticket, but not the value of your time.

C. the value of your time, but not the price you pay for the ticket.

D. neither the price of the ticket nor the value of your time.

Point Value: 1


You are considering staying in college another semester so that you can complete a major in economics.? In deciding whether or not to stay you should

A. compare the total cost of your education to the total benefits of your education.

B. compare the total cost of your education to the benefits of staying one more semester.

C. compare the cost of staying one more semester to the benefits of staying one more semester.

D. compare the total benefits of your education to the cost of staying one more semester.

Point Value: 1


Trade between countries tends to

A. reduce both competition and specialization.

B. reduce competition and increase specialization.

C. increase competition and reduce specialization.

D. increase both competition and specialization.

Point Value: 1


5- The "invisible hand" directs economic activity through

A. advertising.

B. prices.

C. central planning.

D. government regulations.

Point Value: 1


6- One reason we need government, even in a market economy, is that

A. there is insufficient market power in the absence of government.

B. property rights are too strong in the absence of government.

C. the invisible hand is not perfect.

D. Both a and b are correct.

Point Value: 1

7.This question has not been answered completely
The government enforces property rights by

A. requiring property owners to pay property taxes.

B. providing police and courts.

C. forcing people to own property.

D. providing public parks and recreation facilities.

Point Value: 1

8.This question has not been answered completely
Causes of market failure include

A. externalities and market power.

B. market power and incorrect forecasts of consumer demand.

C. externalities and foreign competition.

D. incorrect forecasts of consumer demand and foreign competition.

Point Value: 1

9.This question has not been answered completely
Market power refers to the

A. power of a single person or small group to influence market prices.

B. ability of a person or small group to successfully market new products.

C. power of the government to regulate a market.

D. importance of a certain market in relation to the overall economy.

Point Value: 1

10.This question has not been answered completely
Large or persistent inflation is almost always caused by

A. excessive government spending.

B. excessive growth in the quantity of money.

C. foreign competition.

D. higher-than-normal levels of productivity.

1. To maximize profits, a firm should produce output up to the point where

A. marginal revenue equals marginal cost

B. price equals marginal cost

C. the gap between the demand curve and the ATC is the greatest

D. all of the above

E. answers a and b, but not c

2. Which statement is false?

A. a profit maximizing firm will increase production when price exceeds marginal cost

B. the lowest point on a firm's short-run supply curve is at the shut-down point

C. A firm will operate at that ouput where MC equals MR only when it is maximizing profits

D. A profit-maximizing firm will decrease production when marginal cost exceeds price.

3. which statement is true?

A. all monopolies are good

B. All monopolies are bad

C. Most natural monopolies are government regulated or government owned

D. None of these statements is true

4. There are _____ limits to monopoly power

A. no

B. some

C. many

5. Which statement is true?

A. the monopolist's most efficient output is her most profitable output as well

B. the monopolist charges a higher price than the perfect competitor in the long run.

C. all monopolists have control over an essential resource.

D. none is true

6. As a firm grows larger

A. economies of scale set in, then diseconomies of scale.

B. diseconomies of scale set in, then economies of scale.

C. economies of scale and diseconomies of scale set in at the same time.

D. neither economies of scale nor diseconomies of scale set in.

7. A monopolist operates at the minimum point of her ATC curve

A. only in the short run

B. only in the long run

C. in both the short run and the long run

D. in neither the short run nor the long run

8. A natural monopoly

A. has an average cost curve that reaches minimum possible average cost at a low level of output.

B. has a marginal cost curve that is steeply upward slopoing.

C. is usually subject to antitrust suits

D is usually allowed to choose its price so as to maximize profits in the United States.

E. occurs when a single firm can supply the entire market demand for a product at a lower average cost than would be possible if two or more firms supplied the market.

9. For a monopolist, the price of the product

A. always equals the marginal revenue

B. is always less than the marginal revenue

C. exceeds the marginal revenue

D. always equals the marginal cost of the product

10. Monopolies are usually viewed with concern from an economic standpoint since

A. size is ingerently dangerous; the larger ther firm, the more likely it is to squeeze out the "little producer"

B. resources may be allocated in an efficient manner.

C. the government may be put at the mercy of several large producers

D. always equals the marginal cost of the product

1. When economists speak of "marginal," they mean
a. Opportunity.
b. Scarcity.
c. Incremental.
d. Unimportant.

2. Managers undertake an investment only if
a. Marginal benefits of the investment are greater than zero.
b. Marginal costs of the investment are greater than marginal benefits of the investment.
c. Marginal benefits are greater than marginal costs.
d. Investment decisions do not depend on marginal analysis.

3. A firm produces 500 units per week. It hires 20 full-time workers (40 hours/week) at an hourly wage of $15. Raw materials are ordered weekly, and they cost $10 for every unit produced. The weekly cost of the rent payment for the factory is $2,250. How do the overall costs break down?
a. Total variable cost is $17,000; total fixed cost is $2,250; total cost is $19,250.
b. Total variable cost is $12,000; total fixed cost is $7,250; total cost is $19,250.
c. Total variable cost is $5,000; total fixed cost is $14,250; total cost is $19,250.
d. Total variable cost is $5,000; total fixed cost is $2,250; total cost is $7,250.

4. Total costs increase from $1,500 to $1,800 when a firm increases output from 40 to 50 units. Which of the following is true if marginal cost is constant?
a. FC = $100
b. FC = $200
c. FC = $300
d. FC = $400

5. A manager of a clothing firm is deciding whether to add another factory in addition to one already in production. The manager would compare
a. The total benefits gained from the two factories to the total costs of running the two factories.
b. The incremental benefit expected from the second factory to the total costs of running the two factories.
c. The incremental benefit expected from the second factory to the cost of the second factory.
d. The total benefits gained from the two factories to the incremental costs of running the two factories.

6. A firm is thinking of hiring an additional worker to their organization who they believe can increase total productivity by 100 units a week. The cost of hiring him or her is $1,500 per week. If the price of each unit is $12,
a. The MR of hiring the worker is $1,500.
b. The MC of hiring the worker is $1,200.
c. The firm should not hire the worker since MB < MC.
d. All the above

7. A retailer has to pay $9 per hour to hire 13 workers. If the retailer only needs to hire 12 workers, a wage rate of $7 per hour is sufficient.
What is the marginal cost of the 13th worker?
a. $117
b. $9
c. $33
d. $84

8. If a firm's average cost is rising, then
a. Marginal cost is less than average cost.
b. Marginal cost is rising.
c. Marginal cost is greater than average cost.
d. The firm is making an economic profit.

9. After the first week of his MBA Managerial Economics class, one of your pharmaceutical sales representatives accuses you of committing the sunk-cost fallacy by refusing to allow him to reduce price to make what he considers to be a really tough sale. Which of the following suggests the sales representative may be right?
a. Most of the costs of drug development are sunk, not fixed.
b. Sales representatives are paid a sales commission on revenue, so they don't care about the costs of drug development.
c. Sales representatives don't worry that a low price today may make it more difficult for the company's other sales representatives to charge higher prices to their customers, tomorrow.
d. Sales representatives think only about one thing, sales.

10. A company is producing 15,000 units. At this output level, marginal revenue is $22, and the marginal cost is $18. The firm sells each unit for $48 and average total cost is $40.
What can we conclude from this information?
a. The company is making a loss.
b. The company needs to cut production.
c. The company needs to increase production.
d. Not enough information is provided.

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