managerial econ final
ECO 5305
Final Exam
Answers underlined in yellow 1. Fixed costs include:
a.
variable labor expenses.
b.
output-related energy costs.
c.
output-related raw material costs.
d.
variable interest costs for borrowed capital.
2. Marginal cost equals:
a.
average variable cost at its maximum point.
b.
the change in total fixed cost divided by the change in quantity.
c.
the change in total variable cost divided by the change in quantity.
d.
total cost divided by quantity.
3. If a total product curve exhibits increasing returns to a variable input, the cost elasticity is:
a.
equal to one.
b.
greater than one.
c.
unknown, without further information.
d.
less than one.
4. A firm's capacity is the output:
a.
maximum that can be produced in the long-run.
b.
level where short-run average costs are minimized.
c.
level where long-run average costs are minimized.
d.
maximum that can be produced in the short-run.
5. The output level at which short-run average costs are minimized is:
a.
minimum efficient scale.
b.
where multi-plant economies of scale equal one.
c.
where multi-plant economies of scale exceed one.
d.
capacity.
6. In a perfectly competitive market:
a.
sellers and buyers have perfect information.
b.
entry and exit are difficult.
c.
sellers produce similar, but not identical products.
d.
each seller can affect the market price by changing output.
7. In the long run, firms will exit a perfectly competitive industry if:
a.
excess profits exceed zero.
b.
excess profits are less than zero.
c.
total profit equals zero.
d.
excess profits equal zero.
8. In competitive market equilibrium, the firm's:
a.
MR = MC and P > AR
b.
MR = MC and P > AC
c.
AR = AC and MR > MC
d.
P = MR = AR = AC = MC
9. When profits are maximized in a competitive market, average cost is always:
a.
rising.
b.
falling.
c.
constant.
d.
none of these.
10. In monopoly
Final Exam
Answers underlined in yellow 1. Fixed costs include:
a.
variable labor expenses.
b.
output-related energy costs.
c.
output-related raw material costs.
d.
variable interest costs for borrowed capital.
2. Marginal cost equals:
a.
average variable cost at its maximum point.
b.
the change in total fixed cost divided by the change in quantity.
c.
the change in total variable cost divided by the change in quantity.
d.
total cost divided by quantity.
3. If a total product curve exhibits increasing returns to a variable input, the cost elasticity is:
a.
equal to one.
b.
greater than one.
c.
unknown, without further information.
d.
less than one.
4. A firm's capacity is the output:
a.
maximum that can be produced in the long-run.
b.
level where short-run average costs are minimized.
c.
level where long-run average costs are minimized.
d.
maximum that can be produced in the short-run.
5. The output level at which short-run average costs are minimized is:
a.
minimum efficient scale.
b.
where multi-plant economies of scale equal one.
c.
where multi-plant economies of scale exceed one.
d.
capacity.
6. In a perfectly competitive market:
a.
sellers and buyers have perfect information.
b.
entry and exit are difficult.
c.
sellers produce similar, but not identical products.
d.
each seller can affect the market price by changing output.
7. In the long run, firms will exit a perfectly competitive industry if:
a.
excess profits exceed zero.
b.
excess profits are less than zero.
c.
total profit equals zero.
d.
excess profits equal zero.
8. In competitive market equilibrium, the firm's:
a.
MR = MC and P > AR
b.
MR = MC and P > AC
c.
AR = AC and MR > MC
d.
P = MR = AR = AC = MC
9. When profits are maximized in a competitive market, average cost is always:
a.
rising.
b.
falling.
c.
constant.
d.
none of these.
10. In monopoly