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Economics Final Exam [Chap. 13,16]

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Hell on Earth Economics [Teacher: Abdinova Makpal ; Final Exam + Quizzes] ▼ (Final Exam Prep) Quiz on Economics Final Exam [Chap. 13,16], created by Good Guy Beket on 27/12/2018.
Good Guy Beket
Quiz by Good Guy Beket, updated more than 1 year ago
Good Guy Beket
Created by Good Guy Beket over 5 years ago
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Question 1

Question
Accounting profit is equal to total revenue minus
Answer
  • implicit costs.
  • variable costs.
  • the sum of implicit and explicit costs.
  • explicit costs.
  • marginal costs.

Question 2

Question
Economic profit is equal to total revenue minus
Answer
  • variable costs.
  • implicit costs.
  • explicit costs.
  • marginal costs.

Question 3

Question
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
Answer
  • €30,000.
  • €75,000.
  • €35,000.
  • €70,000.
  • €80,000.

Question 4

Question
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
Answer
  • €80,000.
  • €30,000.
  • €75,000.
  • €70,000.
  • €35,000.

Question 5

Question
If there are implicit costs of production,
Answer
  • 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.

Question 6

Question
If a production function exhibits diminishing marginal product, its slope
Answer
  • 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.

Question 7

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

Question 8

Question
Refer to Figure 13-1. The marginal product of labour as production moves from employing one worker to employing two workers is
Image:
Screenshot 5 (binary/octet-stream)
Answer
  • 10
  • 0
  • 23
  • 40
  • 17

Question 9

Question
Refer to Figure 13-1. The production process described above exhibits
Image:
Screenshot 5 (binary/octet-stream)
Answer
  • constant marginal product of labour.
  • diminishing marginal product of labour.
  • increasing returns to scale.
  • increasing marginal product of labour.
  • decreasing returns to scale.

Question 10

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

Question 11

Question
Refer to Figure 13-2. The average fixed cost of producing four units is
Image:
Screenshot 6 (binary/octet-stream)
Answer
  • €2.50.
  • €26.
  • none of these answers.
  • €10.
  • €5.

Question 12

Question
Refer to Figure 13-2. The average total cost of producing three units is
Answer
  • €28.
  • €6.
  • €3.33.
  • €18.
  • €9.33.

Question 13

Question
Refer to Figure 13-2. The marginal cost of changing production from three units to four units is
Image:
Screenshot 6 (binary/octet-stream)
Answer
  • €7.
  • €5.
  • €8.
  • €9.
  • €6.

Question 14

Question
Refer to Figure 13-2. The efficient scale of production is
Image:
Screenshot 6 (binary/octet-stream)
Answer
  • two units.
  • three units.
  • one unit.
  • five units.
  • four units.

Question 15

Question
When marginal costs are below average total costs,
Answer
  • average fixed costs are rising.
  • average total costs are falling.
  • average total costs are rising.
  • average total costs are minimized.

Question 16

Question
If marginal costs equal average total costs,
Answer
  • average total costs are falling.
  • average total costs are rising.
  • average total costs are maximized.
  • average total costs are minimized.

Question 17

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

Question 18

Question
In the long run, if a very small factory were to expand its scale of operations, it is likely that it would initially experience
Answer
  • an increase in average total costs.
  • diseconomies of scale.
  • constant returns to scale.
  • economies of scale.

Question 19

Question
The efficient scale of production is the quantity of output that minimizes
Answer
  • average fixed cost.
  • average total cost.
  • average variable cost.
  • marginal cost.

Question 20

Question
Which of the following statements is true?
Answer
  • 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.

Question 21

Question
Of all the costs shown below incurred by Superior Airways, which is an example of an implicit cost?
Answer
  • The salaries paid to the pilots.
  • The jet fuel bills.
  • The purchases of parts needed for maintenance of the aircraft.
  • The rent that could be earned on an aircraft that is owned and used by Superior.

Question 22

Question
Everything that needs to be given up whenever a choice is made is called:
Answer
  • an implicit cost.
  • an explicit cost.
  • an opportunity cost.
  • a sunk cost.

Question 23

Question
Accounting profit is generally ________ than economic profit, because accountants ________ implicit costs in their calculations.
Answer
  • greater, consider
  • greater, do not consider
  • smaller, consider
  • smaller, do not consider

Question 24

Question
The law of diminishing marginal product of labor occurs when:
Answer
  • every additional worker hired reduces the quantity produced by the firm.
  • every additional worker hired reduces the total costs of the firm.
  • every additional worker hired contributes a smaller increase in production than previously hired workers.
  • every additional worker hired contributes a smaller increase in total costs than previously hired workers.
  • every additional question contributes more to the destruction of your soul

Question 25

Question
The cost of raw materials will fall under the category of:
Answer
  • fixed costs.
  • variable costs.
  • implicit costs.
  • average fixed costs.

Question 26

Question
The factory rent payments made by a firm fall under the category of:
Answer
  • fixed costs.
  • variable costs.
  • short-run costs.
  • average variable costs.

Question 27

Question
Based on the table above, what is the marginal cost of the tenth unit?
Image:
Screenshot 7 (binary/octet-stream)
Answer
  • $250
  • $200
  • $50
  • $300

Question 28

Question
Based on the table above, if the fixed cost is $500, what is the average total cost of the fifth unit?
Image:
Screenshot 7 (binary/octet-stream)
Answer
  • $250
  • $140
  • $240
  • $100

Question 29

Question
Based on the table above, what is the average variable cost of the fourth unit?
Image:
Screenshot 7 (binary/octet-stream)
Answer
  • $250
  • $125
  • $240
  • $100

Question 30

Question
Economies of scale occur when ________ as the quantity of output increases.
Answer
  • short-run average total cost falls
  • short-run average total cost rises
  • long-run average total cost falls
  • long-run average total cost rises

Question 31

Question
Which of the following is NOT a characteristic of monopolistic competition?
Answer
  • There are many sellers.
  • There are many buyers.
  • Everybody is perfectly informed.
  • The goods are identical across sellers.

Question 32

Question
The diagram depicting monopolistic competition in the short run:
Answer
  • is very similar to the short-run monopoly diagram.
  • is very similar to the short-run perfect competition diagram.
  • is very similar to the short-run oligopoly diagram.
  • is completely different from the diagrams of all the other types of markets.

Question 33

Question
If the average-total-cost curve of a firm in monopolistic competition happens to be above the demand curve, it means:
Answer
  • the firm will have to sell a lot in order to make a profit.
  • the firm will have to sell at a very high price in order to make a profit.
  • other firms are performing better in the market than the firm depicted in the diagram.
  • the firm will be incurring losses in the short run.

Question 34

Question
In the long run, firms in monopolistic competition will see their price:
Answer
  • become equal to their average variable cost.
  • become equal to their average total cost
  • remain well above their average total cost.
  • become equal to their marginal cost.

Question 35

Question
If firms in monopolistic competition are enjoying positive economic profits, in the long run:
Answer
  • they will continue enjoying such profits, since new firms will be unable to enter the industry.
  • consumers will cease wanting to buy the good and will switch to cheaper alternatives.
  • this will attract new firms into the industry, causing prices to drop and profits to disappear.
  • the government will have to step in and regulate the price.

Question 36

Question
In long-run equilibrium, firms in monopolistic competition ________ than firms in perfect competition.
Answer
  • produce less
  • charge a lower price
  • have bigger profits
  • have lower costs

Question 37

Question
In long-run equilibrium in a monopolistically competitive market, the price will be equal to:
Answer
  • marginal cost.
  • marginal revenue.
  • average variable cost.
  • average total cost.

Question 38

Question
A major critique of advertising is that:
Answer
  • it provides information to consumers that they would be better off without.
  • it manipulates people's tastes and preferences.
  • it promotes excessive competition among firms in the industry.
  • it undermines the market price.

Question 39

Question
A major argument in favor of advertising is that:
Answer
  • it provides information to consumers that allows them to make better choices.
  • it helps people reaffirm their tastes and preferences.
  • it promotes competition among firms in the industry, leading to lower prices.
  • it will lower the market price.

Question 40

Question
According to the text, branding can be good for society because:
Answer
  • it allows people to show off the branded goods they use or wear.
  • it keeps generic goods from taking over the market.
  • it provides useful information to consumers about the quality of branded goods.
  • it helps firms enjoy higher prices and profits.
  • Superbowl commercials are the best.

Question 41

Question
Which of the following is relevant to the long-run Phillips curve?
Answer
  • Monetary factors determine its position.
  • If it shifts left, long-run aggregate supply shifts left.
  • Government policy has no effect on it.
  • Its position depends on the natural rate of unemployment.

Question 42

Question
Which of the following shifts the long-run Phillips curve right?
Answer
  • increase in money supply
  • increase in inflation rate
  • increase in unemployment compensation
  • decrease in inflation rate

Question 43

Question
What effect does an increase in the expected rate of inflation have on the short-run and the long-run Phillips curves?
Answer
  • Only the short-run Phillips curve shifts right.
  • Only the short-run Phillips curve shifts left.
  • Both the short-run and the long-run Phillips curves shift to the right.
  • Both the short-run and the long-run Phillips curves shift to the left.

Question 44

Question
If the sacrifice ratio is 2, how much output would be lost by reducing the inflation rate from 6 percent to 2 percent?
Answer
  • 2 percent of annual output
  • 6 percent of annual output
  • 8 percent of annual output
  • 12 percent of annual output

Question 45

Question
Suppose the Bank of Canada announced an increase in interest rates, and suppose also that people believed the Bank was serious about reducing inflation. Which of the following would occur?
Answer
  • The short-run Phillips curve would shift right, and the sacrifice ratio would fall.
  • The short-run Phillips curve would shift right, and the sacrifice ratio would rise.
  • The short-run Phillips curve would shift left, and the sacrifice ratio would fall.
  • The short-run Phillips curve would shift left, and the sacrifice ratio would rise.

Question 46

Question
Which of the following would best illustrate how the Phillips curve shows the short-run tradeoff between inflation and unemployment?
Answer
  • shifts in aggregate demand
  • shifts in short-run aggregate supply
  • shifts in long-run aggregate supply
  • shifts in money demand

Question 47

Question
What effect will an increase in aggregate demand have?
Answer
  • It will cause the Phillips curve to shift left.
  • It will cause the Phillips curve to shift right.
  • It will cause a movement up the Phillips curve.
  • It will cause a movement down the Phillips curve.

Question 48

Question
Which of the following is a characteristic of the long-run Phillips curve?
Answer
  • It is negatively sloped.
  • It is positively sloped.
  • It is a horizontal line at the natural rate of unemployment.
  • It is a vertical line at the natural rate of unemployment.

Question 49

Question
Suppose that inflationary expectations increase. Which of the following would we expect?
Answer
  • The long-run Phillips curve would shift right.
  • The long-run Phillips curve would shift left.
  • The short-run Phillips curve would shift right.
  • The short-run Phillips curve would shift left.

Question 50

Question
Which of the following best describes the natural-rate hypothesis?
Answer
  • Unemployment falls when inflation increases.
  • An increase in the money supply increases the rate of inflation.
  • Unemployment rises when inflation increases.
  • Unemployment always returns to its natural rate regardless of the level of inflation.

Question 51

Question
In order to reduce inflation, which of the following must an economy endure?
Answer
  • a period of high unemployment and low output
  • a period of high unemployment and high output
  • a period of low unemployment and low output
  • a period of low unemployment and high output

Question 52

Question
According to Phillips, which of the following conditions occurred in years of exceptionally high unemployment?
Answer
  • Rates of inflation were low.
  • Rates of inflation were high.
  • Rates of disinflation were low
  • Rates of disinflation were high.

Question 53

Question
Which of the following events would shift the Phillips curve to the right?
Answer
  • a decrease in aggregate supply
  • a tax cut that boosts aggregate demand for goods and services
  • an increase in the portion of the labour force made up of middle-aged individuals
  • a decline in the expected rate of inflation
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