ECN 601 Week 4 Exam 1

(ECN 601 Week 4 Exam 1)

1. Question: The opportunity cost of an action is:
2. Question: Price ceilings cause:
3. Question: A company invested $400,000 in a technology that reduced the overall costs of production by reducing their cost per unit from $2 to $1.85. Later, a manager has an opportunity to outsource production to another company at a cost per unit of $1.75. If you are the manager, you:
4. Question: An increase in the price of a complement shifts the demand curve to the:
5. Question: A firm sells 1,000 units per It charges $15 per unit, the average variable costs are $10, and the average fixed costs are $25. In the long run, the firm should:
6. Question: A monopolistically competitive firm will tend to have a more elastic demand curve than a monopolist because:
7. Question: In an oligopoly, firms will tend to compete on the basis of
8. Question: The government decided to reduce taxes on fast-food to increase tax The government assumes that fast-food products have:
9. Question: At a price for which quantity demanded exceeds quantity supplied, a is experienced, which pushes the price           toward its equilibrium
10. Question: In general, the smaller the price elasticity:
11. Question: A buyer values a house at $525,000 and a seller values the same house at $485,000. If sales tax is 8% and is levied on the seller, then what would be the lowest price at which the seller would be willing to sell?
12. Question: Use the table provided to answer the following question. If the firm hires eight workers, the total fixed costs is:
13. Question: Use the table provided to answer the following question. If the firm hires five workers, the average cost equals:
14. Question: An example of a price floor is:
15. Question: A manager invests $20,000 in equipment that would help the company reduce it’s per unit costs from $15 to $12. He expects the equipment to be in use for the next seven years. After two years, he realizes that if he outsourced the production, the unit cost would be $7 instead. At this point what should the senior manager do?
16. Question: A car dealership union negotiates a contract that dramatically increases the salaries of all If one of the salesmen is thinking of changing careers to be a hardware salesman, his opportunity cost:
17. Question: A business produces 5,000 units per It spends $12,000 on raw materials. It pays wages of $20,000. Other costs include $50,000 for rent, paid by the month. In order to break even, the selling price per unit will have to be:
18. Question: Use the table … to answer the following question. If hiring the fourth worker increases total product by 50 units and the price of each unit is $15:
19. Question: The change in quantity … from a change in price is:
20. Question: An increase in the price of a substitute shifts the demand curve to the:
21. Question: Which of the following factors would shift the supply curve for ice cream to the right?
22. Question: Use the table … to answer the following How many units should the profit maximizing firm produce?
23. Question: Use the table … to answer the following What is the marginal revenue from producing the fourth unit?
24. Question: Peter’s Pizzeria sells both pizzas and It wants to increase the sales of its pizzas. Assuming that the pizza and the sodas are complements, which of these strategies can it employ?
25. Question: If the price elasticity of demand is 0.8 and the firm increases price, revenue will:
26. Question: The difference between the minimum price the producer is willing to accept and the price the producer actually receives for a product is … to as:
27. Question: Which of the following describes a firm?
28. Question: Jim saw a decrease in the quantity … for his firm’s product from 8,000 to 6,000 units per week when he … the price of the product from $200 to $250. What is Jim’s own price elasticity of demand?
29. Question: A firm sells 1,000 units per It charges $70 per unit, the average variable costs are $25, and the average … costs are $65. In the short run, the firm should:
30. Question: If the cross-price elasticity of demand between two goods is negative, then: