Eco402 Solved Online Quizzes
Thursday, June 02, 2011 Posted In Eco Edit This
1. The "perfect information" assumption of perfect competition includes all of the following except one. Which one?
Consumers know their preferences. Consumers know their income levels. Consumers know the prices available.Consumers can anticipate price changes.
2. Incremental cost is the same concept as ______________ cost.
Average Marginal Fixed Variable
3. A production function assumes a given: Technology. Set of input prices. Ratio of input prices. Amount of output. 4. Assume that beer is an inferior good. If the price of beer falls, then the substitution effect results in the person buying ______ of the good and the income effect results in the person buying ______ of the good.
More, more More, less Less, more Less, less
5. Producer surplus for the whole market can be thought of as:
Total profit.
Variable operating profit plus factor rents. Total profit minus factor rents earned by lower cost firms. Total profit plus factor rents earned by lower cost firms.
6. Baba Burgers has discovered there are economies of scope available to the restaurant. Which is most likely to be a response to this discovery? Baba expands burger production, focusing on that one good. Baba contracts burger production. Baba adds grilled chicken sandwiches to the menu. Baba cuts back on the diversity of the menu.
7. The endpoints (horizontal and vertical intercepts) of the budget line:
Measure its slope. Measure the rate at which one good can be substituted for another. Measure the rate at which a consumer is willing to trade one good for another. Represent the quantity of each good that could be purchased if all of the budget were allocated to that good.
8. The "perfect information" assumption of perfect competition includes all of the following except one. Which one? Consumers know their preferences. Consumers know their income levels. Consumers know the prices available. Consumers can anticipate price changes.
9. The difference between the economic and accounting costs of a firm are: The accountant's fees. The corporate taxes on profits. The opportunity costs of the factors of production that the firm owns. The sunk costs incurred by the firm.
10. lastic and steel are substitutes in the production of body panels for certain automobiles. If the price of plastic increases, with other things remaining the same, we would expect: The price of steel to fall. The demand curve for steel to shift to the right. The demand curve for plastic to shift to the left. The demand curve for steel to shift to the left.
11. Cost-output elasticity can be written and calculated as:
MC/AC. AC/MC (AC)(MC) (AC)2(MC)
12. Fixed costs are fixed with respect to changes in:
Output. Capital expenditure. Wages. Time.
13. The presence of a learning curve may induce a decision maker in a startup firm to choose:
Low levels of output to exploit economies of scale. High levels of output to exploit economies of scale. Low levels of output to shift the average cost curve down over time. High levels of output to shift the average cost curve down over time.
14. Which of the following is true regarding the relationship between returns to scale and economies of scope?
A firm experiencing economies of scope must also experience increasing returns to scale. Economies of scale and economies of scope must occur together. A firm experiencing increasing returns to scale must also experience economies of scope. There is no definite relationship between returns to scale and economies of scope.
15.Salman would prefer a certain income of $20,000 to a gamble with a 0.5 probability of $10,000 and a 0.5 probability of $30,000. Based on this information:
We can infer that Salman is risk neutral. We can infer that Salman is risk averse. We can infer that Salman is risk loving. We cannot infer Salman’s risk preferences.
16. When the average product is decreasing, marginal product:
Equals average product. Is increasing. Exceeds average product. Is less than average product? 17. Government intervention can increase total welfare when:
There are costs or benefits that are external to the market. Consumers do not have perfect information about product quality. A high price makes the product unaffordable for most consumers. There are costs or benefits that are external to the market and consumers do not have perfect information about product quality.
18. If a competitive firm's marginal cost curve is U-shaped then:
Its short run supply curve is U-shaped too. Its short run supply curve is the downward-sloping portion of the marginal cost curve. Its short run supply curve is the upward-sloping portion of the marginal cost curve. Its short run supply curve is the upward-sloping portion of the marginal cost curve that lies above the short run average variable cost curve.
19. Economies of scope refer to:
Changes in technology. The very long run. Multiproduct firms. Single product firms that utilize multiple plants.
20. Although there are many reasons why a market can be non-competitive, the principal economic difference between a competitive and a non-competitive market is:
The extent to which any firm can influence the price of the product. The size of the firms in the market. The annual sales made by the largest firms in the market. The presence of government intervention.
21. Indifference curves that are convex to the origin reflect:
An increasing marginal rate of substitution. A decreasing marginal rate of substitution. A constant marginal rate of substitution. A marginal rate of substitution that first decreases, then increases.
22. The endpoints (horizontal and vertical intercepts) of the budget line:
Measure its slope. Measure the rate at which one good can be substituted for another. Measure the rate at which a consumer is willing to trade one good for another. Represent the quantity of each good that could be purchased if all of the budget were allocated to that good.
23. Consider the following statements when answering this question: I. "In the long run equilibrium of a perfectly competitive market, a firm's producer surplus equals the sum of the economic rents earned on its inputs to production." II. "In the long run equilibrium of a perfectly competitive market, the amount of economic profit earned can differ across firms, but not the amount of producer surplus."
I and II are true. I is true, and II is false. I is false, and II is true. I and II are false.
24. Suppose that the prices of good A and good B were to suddenly double. If good A is plotted along the horizontal axis:
The budget line will become steeper. The budget line will become flatter. The slope of the budget line will not change.The slope of the budget line will change, but in an indeterminate way.
25. A country's government would like to raise the price of one its most important agricultural crops, coffee beans. Which of the following government programs will result in higher prices for coffee beans? Select correct option: An import quota on coffee beans. An acreage limitation program which provides coffee bean farmers financial incentives to leave some of their acreage idle. An import tariff on coffee beans. All of the given options.
26. Which of the following is NOT a generally accepted measure of the riskiness of an investment? Select correct option: Standard deviation. Expected value. Variance. None of the given options.
27. Which of the following is a positive statement? Select correct option: When the price of a good goes up, consumers buy less of it. When the price of a good goes up, firms produce more of it. When the Federal government sells bonds, interest rates rise and private investment is reduced. All of the given options.
28. Rabia knows average total cost and average variable cost for a given level of output. Which of the following costs can she not determine given this information? Select correct option: Average fixed cost Fixed cost Variable cost Rabia can determine all of the above costs given the information provided.
29.Which of the following is NOT true about price floors? Select correct option: Consumer surplus is always lower than it would be in the competitive equilibrium. Producer surplus could be lower, higher, or the same as it would be in competitive equilibrium. Producer surplus could be negative as the result of a price floor. Producers will often respond to a price floor by cutting production to the point at which price equals marginal cost.
30. A production function in which the inputs are perfectly substitutable would have isoquants that are:Select correct option:
Convex to the origin. L shaped. Linear. Concave to the origin.
31. For an inferior good: Select correct option:
The price elasticity of demand is negative; the income elasticity of demand is negative. The price elasticity of demand is positive; the income elasticity of demand is negative. The price elasticity of demand is negative; the income elasticity of demand is positive. The price elasticity of demand is positive; the income elasticity of demand is positive
32. When a product transformation curve is bowed outward, there are _______________ in production.Economies of scope Economies of scale Diseconomies of scope Diseconomies of scale
33. The marginal rate of technical substitution is equal to the: Slope of the total product curve. Change in output minus the change in labor. Change in output divided by the change in labor. Ratio of the marginal products of the inputs.
34. Consider two goods X and Y available for consumption. Assume that the price of X changes whilethe price of Y remains fixed. For these two goods, the price-consumption curve illustrates the:
Relationship between the price of X and consumption of Y. Utility-maximizing combinations of X and Y for each price of X. Relationship between the price of Y and the consumption of X. Utility-maximizing combinations of X and Y for each quantity of X.
35. Assume that two investment opportunities have identical expected values of $100,000. Investment Ahas a variance of 25,000, while investment B's variance is 10,000. We would expect most investors (who dislike risk) to prefer investment opportunity:
A because it has less risk. A because it provides higher potential earnings. B because it has less risk. B because of its higher potential earnings.
36. The law of diminishing returns refers to diminishing: Total returns. Marginal returns. Average returns. All of the given option
37. If the isoquants are straight lines, then:
Inputs have fixed costs at all use rates. The marginal rate of technical substitution of inputs is constant. Only one combination of inputs is possible. There are constant returns to scale.
38. The total cost (TC) of producing computer software diskettes (Q) is given as: TC = 200 + 5Q. Whatis the variable cost?
200 5Q 5 5 + (200/Q)
39. The demand curve facing a perfectly competitive firm is:
The same as the market demand curve. Downward-sloping and less flat than the market demand curve. Perfectly horizontal. Perfectly vertical.
40. The cost-output elasticity is used to measure:
Economies of scope.
Economies of scale. The curvature in the fixed cost curve. Steepness of the production function.
41.The budget line in portfolio analysis shows that:
The expected return on a portfolio increases as the standard deviation of that return increases. The expected return on a portfolio increases as the standard deviation of that return decreases. The expected return on a portfolio is constant. The standard deviation of a portfolio is constant.
42.A Rolling Stones song goes: “You can’t always get what you want.” This echoes an important theme from microeconomics. Which of the following statements is the best example of this theme?
Consumers must make the best purchasing decisions they can, given their limited incomes. Workers do not have as much leisure as they would like, given their wages and working conditions. Workers in planned economies, such as North Korea, do not have much choice over jobs. Firms in market economies have limited financial resources.
43. Compared to a tariff, an import quota, which restricts imports to the same amount as the tariff, willleave the country as a whole:
Worse off than a comparable tariff. Not as bad off as a comparable tariff. About the same as a comparable tariff.Any of the above can be true.
44. Any combination of products inside the production possibility frontier is:
Allocatively inefficient Consumer inefficient Productively inefficient None of the given option.
45 .In the long run, which of the following is considered a variable cost?
Expenditures for wages. Expenditures for raw materials. Expenditures for capital machinery and equipment. All of the given options.
46. Two firms, each producing different goods, can achieve a greater output than one firm producingboth goods with the same inputs. We can conclude that the production process involves:
Diseconomies of scope. Economies of scale. Decreasing returns to scale. Increasing returns to scale.
Consumers know their preferences. Consumers know their income levels. Consumers know the prices available.Consumers can anticipate price changes.
2. Incremental cost is the same concept as ______________ cost.
Average Marginal Fixed Variable
3. A production function assumes a given: Technology. Set of input prices. Ratio of input prices. Amount of output. 4. Assume that beer is an inferior good. If the price of beer falls, then the substitution effect results in the person buying ______ of the good and the income effect results in the person buying ______ of the good.
More, more More, less Less, more Less, less
5. Producer surplus for the whole market can be thought of as:
Total profit.
Variable operating profit plus factor rents. Total profit minus factor rents earned by lower cost firms. Total profit plus factor rents earned by lower cost firms.
6. Baba Burgers has discovered there are economies of scope available to the restaurant. Which is most likely to be a response to this discovery? Baba expands burger production, focusing on that one good. Baba contracts burger production. Baba adds grilled chicken sandwiches to the menu. Baba cuts back on the diversity of the menu.
7. The endpoints (horizontal and vertical intercepts) of the budget line:
Measure its slope. Measure the rate at which one good can be substituted for another. Measure the rate at which a consumer is willing to trade one good for another. Represent the quantity of each good that could be purchased if all of the budget were allocated to that good.
8. The "perfect information" assumption of perfect competition includes all of the following except one. Which one? Consumers know their preferences. Consumers know their income levels. Consumers know the prices available. Consumers can anticipate price changes.
9. The difference between the economic and accounting costs of a firm are: The accountant's fees. The corporate taxes on profits. The opportunity costs of the factors of production that the firm owns. The sunk costs incurred by the firm.
10. lastic and steel are substitutes in the production of body panels for certain automobiles. If the price of plastic increases, with other things remaining the same, we would expect: The price of steel to fall. The demand curve for steel to shift to the right. The demand curve for plastic to shift to the left. The demand curve for steel to shift to the left.
11. Cost-output elasticity can be written and calculated as:
MC/AC. AC/MC (AC)(MC) (AC)2(MC)
12. Fixed costs are fixed with respect to changes in:
Output. Capital expenditure. Wages. Time.
13. The presence of a learning curve may induce a decision maker in a startup firm to choose:
Low levels of output to exploit economies of scale. High levels of output to exploit economies of scale. Low levels of output to shift the average cost curve down over time. High levels of output to shift the average cost curve down over time.
14. Which of the following is true regarding the relationship between returns to scale and economies of scope?
A firm experiencing economies of scope must also experience increasing returns to scale. Economies of scale and economies of scope must occur together. A firm experiencing increasing returns to scale must also experience economies of scope. There is no definite relationship between returns to scale and economies of scope.
15.Salman would prefer a certain income of $20,000 to a gamble with a 0.5 probability of $10,000 and a 0.5 probability of $30,000. Based on this information:
We can infer that Salman is risk neutral. We can infer that Salman is risk averse. We can infer that Salman is risk loving. We cannot infer Salman’s risk preferences.
16. When the average product is decreasing, marginal product:
Equals average product. Is increasing. Exceeds average product. Is less than average product? 17. Government intervention can increase total welfare when:
There are costs or benefits that are external to the market. Consumers do not have perfect information about product quality. A high price makes the product unaffordable for most consumers. There are costs or benefits that are external to the market and consumers do not have perfect information about product quality.
18. If a competitive firm's marginal cost curve is U-shaped then:
Its short run supply curve is U-shaped too. Its short run supply curve is the downward-sloping portion of the marginal cost curve. Its short run supply curve is the upward-sloping portion of the marginal cost curve. Its short run supply curve is the upward-sloping portion of the marginal cost curve that lies above the short run average variable cost curve.
19. Economies of scope refer to:
Changes in technology. The very long run. Multiproduct firms. Single product firms that utilize multiple plants.
20. Although there are many reasons why a market can be non-competitive, the principal economic difference between a competitive and a non-competitive market is:
The extent to which any firm can influence the price of the product. The size of the firms in the market. The annual sales made by the largest firms in the market. The presence of government intervention.
21. Indifference curves that are convex to the origin reflect:
An increasing marginal rate of substitution. A decreasing marginal rate of substitution. A constant marginal rate of substitution. A marginal rate of substitution that first decreases, then increases.
22. The endpoints (horizontal and vertical intercepts) of the budget line:
Measure its slope. Measure the rate at which one good can be substituted for another. Measure the rate at which a consumer is willing to trade one good for another. Represent the quantity of each good that could be purchased if all of the budget were allocated to that good.
23. Consider the following statements when answering this question: I. "In the long run equilibrium of a perfectly competitive market, a firm's producer surplus equals the sum of the economic rents earned on its inputs to production." II. "In the long run equilibrium of a perfectly competitive market, the amount of economic profit earned can differ across firms, but not the amount of producer surplus."
I and II are true. I is true, and II is false. I is false, and II is true. I and II are false.
24. Suppose that the prices of good A and good B were to suddenly double. If good A is plotted along the horizontal axis:
The budget line will become steeper. The budget line will become flatter. The slope of the budget line will not change.The slope of the budget line will change, but in an indeterminate way.
25. A country's government would like to raise the price of one its most important agricultural crops, coffee beans. Which of the following government programs will result in higher prices for coffee beans? Select correct option: An import quota on coffee beans. An acreage limitation program which provides coffee bean farmers financial incentives to leave some of their acreage idle. An import tariff on coffee beans. All of the given options.
26. Which of the following is NOT a generally accepted measure of the riskiness of an investment? Select correct option: Standard deviation. Expected value. Variance. None of the given options.
27. Which of the following is a positive statement? Select correct option: When the price of a good goes up, consumers buy less of it. When the price of a good goes up, firms produce more of it. When the Federal government sells bonds, interest rates rise and private investment is reduced. All of the given options.
28. Rabia knows average total cost and average variable cost for a given level of output. Which of the following costs can she not determine given this information? Select correct option: Average fixed cost Fixed cost Variable cost Rabia can determine all of the above costs given the information provided.
29.Which of the following is NOT true about price floors? Select correct option: Consumer surplus is always lower than it would be in the competitive equilibrium. Producer surplus could be lower, higher, or the same as it would be in competitive equilibrium. Producer surplus could be negative as the result of a price floor. Producers will often respond to a price floor by cutting production to the point at which price equals marginal cost.
30. A production function in which the inputs are perfectly substitutable would have isoquants that are:Select correct option:
Convex to the origin. L shaped. Linear. Concave to the origin.
31. For an inferior good: Select correct option:
The price elasticity of demand is negative; the income elasticity of demand is negative. The price elasticity of demand is positive; the income elasticity of demand is negative. The price elasticity of demand is negative; the income elasticity of demand is positive. The price elasticity of demand is positive; the income elasticity of demand is positive
32. When a product transformation curve is bowed outward, there are _______________ in production.Economies of scope Economies of scale Diseconomies of scope Diseconomies of scale
33. The marginal rate of technical substitution is equal to the: Slope of the total product curve. Change in output minus the change in labor. Change in output divided by the change in labor. Ratio of the marginal products of the inputs.
34. Consider two goods X and Y available for consumption. Assume that the price of X changes whilethe price of Y remains fixed. For these two goods, the price-consumption curve illustrates the:
Relationship between the price of X and consumption of Y. Utility-maximizing combinations of X and Y for each price of X. Relationship between the price of Y and the consumption of X. Utility-maximizing combinations of X and Y for each quantity of X.
35. Assume that two investment opportunities have identical expected values of $100,000. Investment Ahas a variance of 25,000, while investment B's variance is 10,000. We would expect most investors (who dislike risk) to prefer investment opportunity:
A because it has less risk. A because it provides higher potential earnings. B because it has less risk. B because of its higher potential earnings.
36. The law of diminishing returns refers to diminishing: Total returns. Marginal returns. Average returns. All of the given option
37. If the isoquants are straight lines, then:
Inputs have fixed costs at all use rates. The marginal rate of technical substitution of inputs is constant. Only one combination of inputs is possible. There are constant returns to scale.
38. The total cost (TC) of producing computer software diskettes (Q) is given as: TC = 200 + 5Q. Whatis the variable cost?
200 5Q 5 5 + (200/Q)
39. The demand curve facing a perfectly competitive firm is:
The same as the market demand curve. Downward-sloping and less flat than the market demand curve. Perfectly horizontal. Perfectly vertical.
40. The cost-output elasticity is used to measure:
Economies of scope.
Economies of scale. The curvature in the fixed cost curve. Steepness of the production function.
41.The budget line in portfolio analysis shows that:
The expected return on a portfolio increases as the standard deviation of that return increases. The expected return on a portfolio increases as the standard deviation of that return decreases. The expected return on a portfolio is constant. The standard deviation of a portfolio is constant.
42.A Rolling Stones song goes: “You can’t always get what you want.” This echoes an important theme from microeconomics. Which of the following statements is the best example of this theme?
Consumers must make the best purchasing decisions they can, given their limited incomes. Workers do not have as much leisure as they would like, given their wages and working conditions. Workers in planned economies, such as North Korea, do not have much choice over jobs. Firms in market economies have limited financial resources.
43. Compared to a tariff, an import quota, which restricts imports to the same amount as the tariff, willleave the country as a whole:
Worse off than a comparable tariff. Not as bad off as a comparable tariff. About the same as a comparable tariff.Any of the above can be true.
44. Any combination of products inside the production possibility frontier is:
Allocatively inefficient Consumer inefficient Productively inefficient None of the given option.
45 .In the long run, which of the following is considered a variable cost?
Expenditures for wages. Expenditures for raw materials. Expenditures for capital machinery and equipment. All of the given options.
46. Two firms, each producing different goods, can achieve a greater output than one firm producingboth goods with the same inputs. We can conclude that the production process involves:
Diseconomies of scope. Economies of scale. Decreasing returns to scale. Increasing returns to scale.
