100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
Previously searched by you
Ivy Software MBA Prep works Fundamentals of Economics Latest update 2024 – 2025 Practice Exam Questions with Correct Verified Answers / Rated A+$13.99
Add to cart
Ivy Software MBA Prep works Fundamentals of
Economics Latest update 2024 – 2025 Practice
Exam Questions with Correct Verified Answers /
Rated A+
The production of a product has either economies of scale, constant economies of
scale, or diseconomies of scale (t/F) - ANSWER - True
If a company's average total costs remain constant as output increases, then the
company has constant economies of scale. (t/F) - ANSWER - TRUE
A sunk cost is a cost that has already been committed and can be recovered. -
ANSWER - false. can never be recovered. in contrast, any product that can be re-sold
for a positive dollar amount would not be considered a sunk cost.
A business always maximizes profits when it produces where total revenue equals total
cost (t/f) - ANSWER - False. the profit maximizing rule states that a business maximizes
profits when it produces a quantity where the MR from selling another unit equals the
MC of producing an additional unit.
A business should shut down if production at the profit maximizing quantity generates
total revenues that are less than total fixed costs. (t/f) - ANSWER - false. a business
should shut down when the losses from operating are greater than the total fixed costs.
short run shutdown rule. - ANSWER - a business should shut down if production at the
profit maximizing quantity
pg. 1
,The accountants hired by Costa law firm have calculated that at the profit maximizing
quantity, total fixed costs equal $56,791, total variable costs equal $113,555 and total
revenue equals $112,000. Because of this info, Costa Law firm decides:
A) to exit the industry
B) to shut down
C) decides to stay open because shutting down would be more expensive
D) decides to stay open because they are making an economic profit - ANSWER - B. to
shut down. the shutdown rule states that a business should shut down in the short run
only if total revenue is less than total variable costs. In this case, total revenue is
$112,000 and total variable cost is $113,555. Because total variable cost exceeds total
revenue, CLF should shut down.
How can you tell if a business is operating in a perfectly competitive market? -
ANSWER - the marginal revenue from selling an additional unit does not change as
output increases. They are also known as a price taker. You will notice the Marginal
revenue column stays constant as output increases.
What is the per unit price in a perfectly competitive market? The market equilibrium
price is equal to - ANSWER - marginal revenue
total cost equals - ANSWER - total revenue minus profit
if marginal revenues and marginal costs do not equal in a chart choose the closest
option to determine marginal cost (t/f) - ANSWER - true
In the WSJ article it was reported that Mitsubishi is seeking a buyer for its U.S>
operations, a move that may well signal the company's intent to exit the world's largest
car market. The potential move by Mitsubishi is a matter of economies of scale or
economies of scope? - ANSWER - Economies of scale. it is trying to sell its U.S>
operations because they have been losing money for some time in the U.S. market. By
contracting its scale of operation, Mitsubishi believes that it can turn its financial
situation around.
pg. 2
,when the federal reserve bank sells government bonds, ceteris paribus, it decreases the
supply of money circulating in the economy. In this example, the money supply would
shift left from MS2 to MS1.
Money's basic function is:
a medium of exchange
a store of value
a unit of account
all of the above - ANSWER - all of the above
An item that buyers give sellers when they want to purchase goods and services is
called:
a medium of exchange
a unit of account
liquidity - ANSWER - a medium of exchange
A decrease in the value of money from one period to the next is called:
deflation
inflation
an expansion
unemployment - ANSWER - inflation
The profit maximizing rule states that a business maximizes profits when it produces
where total revenue equals total cost (t/f) - ANSWER - False.
The accountants hired BBB law firm have calculated that at the profit maximizing
quantity total fixed costs equal $56,272,000 total variable costs equal $213,235,000 and
total revenue equals $213,236,000. Because of this information BBB law firm decides
pg. 3
, A. to exit the industry
B. to shut down
C. decides to stay open because shutting down would be more expensive
D. decides to stay open because they are making an economic profit - ANSWER - C.
decides to stay open because shutting down would be more expensive. Because total
variable cost is less than total revenue, BBB Law Firm should stay open.
The accountants hired by Truscott and Associates have calculated that at the
company's current production level, total fixed costs to equal $21,000, total variable
costs to equal $42,000 and total revenue to equal $45,000. Because of this information
Truscott & Associates decide
A) to exit the industry
B) to shut down
C) to stay open because shutting down would be more expensive
D) to stay open because they are making an economic profit - ANSWER - C. to stay
open because shutting down would be more expensive
The profit maximizing rule states that a business maximizes profits when it produces
where marginal revenue equals average variable cost. T/F - ANSWER - False
Real Gross Domestic Product (GDP) - ANSWER - a measure of the market value of the
production of the final goods and services after an adjustment has been made for
changes in the price level
= Nominal GDP / Price level index * 100
The National Income Identity - ANSWER - the accounting concept which states that, in
a time period, aggregate expenditure on wages, interest, rents, and profits is equal to
nominal GDP is equal to consumption spending, investment spending, government
spending, and net exports. The cycle depicted in a circular flow diagram graphically
depicts the national income identity.
pg. 4
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ASSIGNMENT7. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.99. You're not tied to anything after your purchase.
