Econ Final Exam (Test 1 and 2) UPDATED Actual Exam Questions and CORRECT Answers
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Econ
Institution
Econ
Econ Final Exam (Test 1 and 2) UPDATED
Actual Exam Questions and CORRECT
Answers
Belinda is the owner of a department store. Last year her total revenue was $525,000 and her
total labor costs were $200,00. Her overhead expenses, including insurance and legal fees,
were $175,000. The rent o...
Econ Final Exam (Test 1 and 2) UPDATED
Actual Exam Questions and CORRECT
Answers
Belinda is the owner of a department store. Last year her total revenue was $525,000 and her
total labor costs were $200,00. Her overhead expenses, including insurance and legal fees,
were $175,000. The rent on the building was $45,000. Belinda could earn $105,000 per year
working at a nearby department store. If her total revenue increases to $600,000 this year and
all of her other expenses are held constant we know that her economic profit is now -
CORRECT ANSWER✔✔- $75,000
A firm's production function is similar to a recipe used to make a cake in the sense that the
production function shows the combination of _________ used to produce ________. -
CORRECT ANSWER✔✔- inputs ; outputs
If a firm hires another worker and her marginal product of labor is negative, we know that the
firm's total out is - CORRECT ANSWER✔✔- decreasing
In the accompanying table, diminishing marginal product begins after the _______ unit of
output. (Ex 2. 4) - CORRECT ANSWER✔✔- second
Assume that a firm hires an additional employee. If the marginal product for that employee is
greater than for the previous employee hired, it must be because - CORRECT ANSWER✔✔-
there are gains from specialization
Kareem's AFC was ________ per bike. (Ex 2, 6) - CORRECT ANSWER✔✔- $375
If the marginal cost curve is U-shaped - CORRECT ANSWER✔✔- there are productivity
gains from specialization before diminishing marginal product sets in.
Samantha owns a gas station. If she moves into a larger lot but finds that her average costs
have increased in the long run, we know that Samantha is experiencing - CORRECT
ANSWER✔✔- diseconomies of scale.
, In competitive markets - CORRECT ANSWER✔✔- buyers can expect to find consistently
low prices and wide availability of the goods that they want.
Firms in every market structure - CORRECT ANSWER✔✔- will attempt to maximize
profits.
If this firm is maximizing profits, total revenue is represented by the area (Ex 2 11) -
CORRECT ANSWER✔✔- A x C
A company produces at an output level where marginal revenue is equal to marginal cost and
has the following revenue and cost levels:
Marginal cost curve intersects the AVC curve at $140.
Marginal cost curve intersects the ATC curve at $150.
Marginal cost curve intersects the marginal revenue curve at $200.
What do you suggest this firm should do in the short run? - CORRECT ANSWER✔✔- The
firm should continue to produce at a profit level of $50 per unit.
What should a firm in a competitive market do if there is no possible output where the price
would at least be equal to average variable costs? - CORRECT ANSWER✔✔- The firm
should shut down in the short run.
A firm would be making positive profits if the price is (Ex 2 14) - CORRECT ANSWER✔✔-
above $5
A firm would shut down in the short run if the price is (Ex 2 15) - CORRECT ANSWER✔✔-
below $4
It's easy to determine if a firm is making long-run production decisions by looking at its cost
structure because, in the long run, a firm does not have any _____ costs. - CORRECT
ANSWER✔✔- fixed
You shop at the local drugstore because it is convenient. This situation is best described as -
CORRECT ANSWER✔✔- monopolistic competition with differentiation by location.
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