ECN 211 ASU EXAM QUESTIONS WITH 100% CORRECT ANSWERS
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ECN 211 ASU
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ECN 211 ASU
ECN 211 ASU EXAM QUESTIONS WITH 100% CORRECT ANSWERS
What does the long-run average cost curve show? - Answer- the lowest average cost to produce each output level in the long run
As a typical firm increases its output, its marginal cost - Answer- decreases at first and then increases.
Whic...
ECN 211 ASU EXAM QUESTIONS
WITH 100% CORRECT ANSWERS
What does the long-run average cost curve show? - Answer- the lowest average cost to
produce each output level in the long run
As a typical firm increases its output, its marginal cost - Answer- decreases at first and
then increases.
Which of the following is an implicit cost in Jim's business venture?
i. the salary Jim could have earned at another job
ii. the interest Jim must pay on the loan he incurred to help open his business
iii. the interest Jim lost when he used his savings to help open his business - Answer- i
and iii
Dr. Khan starts his own dental practice after quitting his $150,000 job at The Mall Dental
Clinic. His revenues for the first year are $500,000. He paid $90,000 in rent for the
dental office, $60,000 for his office manager's salary, $24,000 for the dental hygienist,
$150,000 for insurance, and $6,000 for other miscellaneous costs. The normal profit
from running his business is $20,000. - Answer- His economic profit is zero.
Denise owns a plant that produces watch parts in Ohio. Denise noticed that when she
hired the last worker, that worker's marginal product exceeded the marginal product of
the previous worker. As a result, when the last worker was hired, Denise's average
product of labor - Answer- increased.
If a firm increases its output and its average cost decreases, the firm is experiencing
which of the following? - Answer- economies of scale
Increasing marginal returns always occurs when the - Answer- marginal product of an
additional worker exceeds the marginal product of the previous worker.
Because the amount of labor a firm employs can be changed, the cost of labor is known
as - Answer- Variable cost
The long run is a time period that is - Answer- long enough to change the size of the
firm's plant and all other inputs.
, Which of the following is a list of fixed inputs for a hospital? - Answer- the emergency
room, intensive care unit, and other facilities.
One requirement for an industry to be perfectly competitive is that - Answer- established
firms have no advantage over new firms.
If a perfectly competitive firm's average total cost is less than the price, then the firm -
Answer- makes an economic profit.
Mark owns a cattle ranch near Hugo, Oklahoma. Mark is currently producing beef at an
output level where marginal revenue exceeds marginal cost. In order to maximize his
profit, Mark should - Answer- Increase his output.
For a perfectly competitive firm, profit is maximized at the output level where
i. total revenue exceeds total cost by the largest amount.
ii. marginal revenue equals marginal cost.
iii. price equals marginal cost. - Answer- i, ii, and iii
Suppose a perfectly competitive market is in short-run equilibrium. Firms that are
incurring a ________ economic loss ________. - Answer- persistent; exit the industry
and shift the market supply curve leftward
A perfectly competitive firm will shut down when the price is just below the minimum
point on the - Answer- average variable cost curve
The firm's over-riding objective is to - Answer- maximize economic profit.
Suppose a perfectly competitive firm's minimum average variable cost is $3 when it
produces 50. If the price is $2 and the firm's marginal cost is $2, the firm should -
Answer- shut down,
In the short run, a perfectly competitive firm can experience which of the following?
i. an economic profit
ii. an economic loss but it continues to stay open
iii. an economic loss equal to its total fixed cost when it shuts down - Answer- i, ii, and iii
The corn market is perfectly competitive, with thousands of corn farmers. In the 2000s,
the price of corn soared so that new farmers entered the corn market. Initially, entry
________ the economic profit of the initial corn farmers and in the long run the initial
corn farmers ________. - Answer- decreased; made zero economic profit
To maximize its profit, in the short run a perfectly competitive firm decides - Answer-
what quantity of output to produce.
If perfectly competitive firms are making an economic profit, then - Answer- new firms
will enter the market.
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