Take-Home Test#4

Date Issued: Saturday, April16^th 2016

Date Due: Tuesday, April 25^th 2016

Course: Microeconomics-202-08N

Class/Time :TR :11:00AM-12:15PM (CA 319)

This test consists of one hundred (100) compulsory multiple-choice questions for all students.

Choose the best answer among the options for each of the questions below

Do all questions in this section

(1)Which of the following statements is false?

(a)Principles#3and 5 are organized in the same category

(b)Principle#6 states “Markets are always the best way to organize economic activity”

(c)Principle#2 states “The cost of something is what you get for it”

(d)All of the above

(2)Which of the following statements about principle#5 is false?

(a)It is a member of the category that poses the question “How people interact”?

(b)It states, “Trade makes everyone and every nation better off”

(c)It is one of three (3) principles organized in its category

(d)None of the ab

(3)Which of the following statements is true?

Suppose Vernie has a vertically sloped demand curve for apricots, it is plausible to conclude that:

(a)Vernie’s demand for apricots violates the law of demand

(b)Vernie’s demand for apricots has a slope that is equal to 0

(c)Vernie’s demand for apricots is positively sloped

(d)None of the above

(4)According to marginal analysis of principle#3, you should spend more time studying economics if the extra benefit from an additional hour of study:

(a)Yields negative test results

(b)Yields positive test results

(c)Outweighs the extra cost of your study time

(d)None of the above

(5)Given ceteris paribus, an increase entrepreneurship in one sector of a dual sector economy will cause the PPF curve of the economy to:

(a)Rotate inwardly to the left

(b)Remain unchanged

(c)Shift outwardly to the right

(d)Rotate to the right

(6)Which of the following statements is true?

Another name for a shortage is:

(a)A surplus in a market

(b)The existence of scarcity

(c)When demand exceeds supply in a market

(d)All of the above

(7)Which of the following questions is a microeconomics query?

(a)Why are some countries rich and others poor?

(b)What causes unemployment in a country?

(c)Why is there a price difference for a cup of coffee in city A and city B?

(d)What is the effect of technological innovations on economy wide productivity?

(8)Which of the following statements is true?

The mechanism that is responsible for adjusting prices in market economies is called:

(a)Central planning

(b)Cooperation

(c)Market forces

(d)Traditions and customs

(9)Given ceteris paribus, if the demand for golden teapots increases in a market relative to the supply of golden teapots, a group of microeconomists who conclude that:

(a)The price of these teapots will fall is correct

(b)The price of these teapots will rise is correct

(c)The price of these teapots will rise is incorrect

(d)None of the above

(10)The tendency of “free markets” to achieve equilibrium is referred to as:

(a)Market efficiency

(b)Market failure

(c)Self-equilibrating

(d)Market forces

(11)Which of the following statements is false?

A market is:

(a)A medium of exchange between buyers and sellers

(b)A social medium of exchange between consumers and producers

(c)A social mechanism with a demand and supply side

(d)None of the above

(12)Which of the following statements is true?

If the supply equation for laptop computers is given as S= 260,000 in a market for these computers, it is plausible to conclude that:

(a)The supply equation conforms to the law of supply

(b)The supply equation suggests that the supply curve for laptop computers is horizontally sloped

(c)The supply equation violates the law of supply for laptop computers

(d)The supply equation represents a positively sloped

Dx

Sx

Price Per Unit ($)

Quantities

P1

Q1

Figure#1-Demand-Supply Curves

A

P3

P2

(13)Which of the following statements about the diagram in Figure#1 above is false?

(a)The demand curve is consistent with the law of demand

(b)The price P3 is a price that creates a surplus

(c)The price P2 is a price that creates a glut

(d)The supply curve conforms to the law of supply

Table#1-Supply and Demand for I-Pods

I-Pods demanded Per month	Price Per I-Pods	I-Pods supplied Per Month
35	$9.25	109
65	7.45	96
68	5.88	68
75	3.75	60
80	2.15	30

(14)Which of the following prices does not cause the demand for I-Pods to exceed the supply for I-Pods in the market for I-Pods in Table#1 above?

(a)$2.75

(b)$5.95

(c)$5.86

(d)$4.76

(15)Which of the following statements at a price of $6.45 per I-Pod in Table#1 is false?

(a)The supply of I-Pods will exceed the demand for I-Pods

(b)There will be a surplus of I-Pods in the market

(c)The supply of I-Pods will be equal to the demand for I-Pods

(d)None of the above

(16)The market equilibrium price for I-Pods in Table#1 is:

(a)$2.15

(b)$4.85

(c)More information is needed

(d)None of the above

(17)Are the laws of supply and demand supported by the price-quantity data for I-Pods in Table#1 above?

(a)Yes

(b)No

(c)Inconsistently

(d)More information needed to respond

(18)All the following are characteristics of capitalist market economies except:

(a)The primacy of private property over ownership of assets

(b)The primacy of profits over the wants and needs of people

(c)The dominance of public property over property

(d)The voluntary exchange of goods and services between buyers and sellers

(19)Which of the following statements about the empirical method is false?

(a)It is a method of analysis that complements the a priori method of analysis

(b)It is a method of analysis that is also known as the inductive method

(c)It is a method of analysis that is a substitute for the deductive method

(d)None of the above

(20)Which of the following statements about the a priori method of analysis that is used by microeconomists is true?

(a)The analysis goes from the concrete to the abstract

(b)The analysis is based on empirical evidence

(c)The analysis is based on logical inference

(d)All of the above

(21)Which of the following statements is false?

Partial equilibrium analysis refers to:

(a)The study of multiple markets or sectors in an economy

(b)The study of a market that achieves partial equilibrium

(c)The changing market conditions that affect equilibria in multiple markets

(d)All of the above

(22)Which of the following pairs is true?

A marketplace is:

(a)Cyberspace and classified ads in the New York Times

(b)Catalogs for JC Penny and the Victoria Secrets store at Fair Oaks Mall

(c)A local college and a local gym in Annandale, Virginia

(d)None of the above

(23)The demand schedule for microeconomics classes shows:

(a)The positive relationship between the price and quantity of microeconomics classes students buy

(b)The negative relationship between the price and quantity of microeconomics classes students buy

(c)The relationship between the price and quantity of microeconomics classes students buy

(d)All of the above

(24)Suppose the demand curve for labor and the supply curve for labor are steep in a labor market; the difference between the quantity supplied of labor and the quantity demanded of labor when a minimum wage law sets a wage rate above the equilibrium wage rate will cause:

(a)A small maximum price for labor

(b)A large amount of unemployment

(c)A small amount of unemployment

(d)A low level of productivity

(25)Which of the following statements is true?

If in July 2009 the demand curve for blueberries is represented by D=20-2P whereas in October 2009 the demand curve for blueberries is represented by D=15-4P in the same market, it would be plausible to conclude that:

(a)The demand curve has shifted to the right in October

(b)The demand curve has rotated to the right in October

(c)The demand curve has shifted to the left in October

(d)Both demand curves are linear and upward sloping

(26)Which of the following factors may be responsible for the change in the demand for blueberries in October 2009 in Q# 25 above?

(a)An increase in consumers’ incomes

(b)An increase in the price of blueberries and a decrease in the price of blackberries

(c)A decrease in the price of blueberries due to a 5 percent consumption subsidy

(d)None of the above

(27)Which of the following best explains the concept of a time-series graph?

(a)A graph that measures price on the Y-axis and quantity demanded on the X-axis

(b)A graph that measures the rate of inflation on the Y-axis and the rate of unemployment on the X-axis

(c)A graph that measures time on the Y-axis and years on the X-axis

(d)None of the above

(28)Which of the following is a normative economic statement?

(a)The national rate of unemployment among African American teenagers is 35 percent

(b)The rate of unemployment for the US is currently 10.2 percent

(c)The saving rate in the US is too low

(d)The rate of divorce in the US is 54 percent

(29)Which of the following statements is true?

If there is a simultaneous decrease in the demand and supply in the market for cooking gas:

(a)The price for cooking gas decreases and the quantity decreases

(b)The price of cooking gas is undetermined and the quantity decreases

(c)The price of cooking gas decreases and the quantity is undetermined

(d)The price for cooking gas increases and the quantity decreases

(30)Suppose you were a policy adviser to a government that wanted to increase the equilibrium price for cigarettes given ceteris paribus, which of the following actions would you recommend to the government?

(a)Take packages of cigarettes from warehouses and sell them

(b)Tax the production of tobacco and cigarettes destined for the market

(c)Subsidize the price of land and credit for tobacco farmers

(d)Tax the consumption of cigarettes destined for the market

(31)Given ceteris paribus, if consumer tastes change so that people are eating less carrots, then what will happen to the market equilibrium for beetroot, a substitute good for carrots?

(a)Price will increase and quantity will increase

(b)Price will increase and quantity will decrease

(c)Price will decrease and quantity will increase

(d)None of the above

(32)If consumers switch away from eating pineapples at the same time that the number of pineapple farmers increases in the market, then:

(a)These two effects nullify each other resulting in no change in the market equilibrium price for pineapples

(b)The market price of pineapples increases

(c)The demand curve shifts to the left and the supply curve shifts to the right

(d)The equilibrium quantity of pineapples must increase in the market

(33)Given the demand-supply situations for pineapples in Q#32 above, which of the following statements is true?

(a)The price of pineapples increases and the quantity decreases unambiguously

(b)The price of pineapples decreases unambiguously and the quantity of pineapples is ambiguous

(c)The price of pineapples decreases ambiguously and the quantity of pineapples is unambiguous

(d)None of the above

(34)A revolutionary technology used in the production of brown rice lowers its cost of production given ceteris paribus. As a result, the market changes to a new equilibrium because of a (an):

(a)An upward movement along the demand curve for brown rice

(b)Rightward shift in the supply curve for brown rice

(c)Rightward shift in the demand curve for brown rice

(d)Shortage of brown rice

(35)If you were a government economic advisor and the government you advise wanted to raise the equilibrium price of Soya milk, which of the following policy action would you recommend to the government?

(a)Take Soya milk from the government reserve and sell it

(b)Subsidize the production costs of Soya milk farmers

(c)Tax the production of Soya milk by farmers

(d)Subsidize the fertilizers and energy costs of Soya milk farmers

(36)Given ceteris paribus, the removal of a 3 percent subsidy on the interest rate paid by celery farmers will have what effect on the market equilibrium of celery?

(a)Price will increase, and quantity will increase

(b)Price will decrease, and quantity will decrease

(c)Price will increase, and quantity will decrease

(d)Price and quantity will stay the same

(37)Which of the following statements is true?

If the federal government subsidies a national day care service for firms that supply this service given ceteris paribus:

(a)The supply curve for day care service will shift to the right

(b)The demand curve for day care service will shift to the right

(c)The demand curve for day care service will shift to the left

(d)Any of the above

(38)Which of the following statements given ceteris paribus is true?

A recent report suggests that frequent cellular phone usage may be linked to brain cancer, given this report it is prudent to expect:

(a)The demand for cellular phones to shift to the right

(b)The demand for cellular phones to remain unchanged

(c)(a) and (b) above

(d)None of the above

(39)Which of the following statements about a government imposed tax on potato growers in Idaho given ceteris paribus is true?

(a)It is a non-price factor that would cause the demand curve for Idaho potato growers to shift inwardly to the left

(b)It is a non-price factor that would cause the supply curve for Idaho potato growers to shift outwardly to the right

(c)It would cause the price of Idaho potatoes to increase relative to its pre-tax price

(d)It would cause the price of Idaho potatoes to remain unchanged relative to its pre-tax price

(40)Which of the following statements is true?

The demand for turkey for last year’s Thanksgiving holiday given ceteris paribus would cause the demand curve to:

(a)To shift to the right

(b)To shift to the left

(c)To shift to the right along with the supply curve

(d)Remain unchanged

(41)Which of the following statements is true?

(a)A shift to the left in the demand curve for apples when the original supply curve for apples remain unchanged will cause the new equilibrium price of apples to rise and its new equilibrium quantity to fall

(b) A shift to the right in the supply curve for apples given that its market demand curve does not change will cause a decrease in the equilibrium price of apples and an increase in its equilibrium quantity

(c)A shift to the right in the supply curve for apples when the original demand curve for apples remain unchanged will cause the new equilibrium price of apples to rise and the new equilibrium quantity to fall

(d)None of the above

Table#2-Supply Schedule for Cherries

$ Price Per box for cherries	Quantity of boxes of Cherries Supplied
9.80	800
8.75	800
7.90	800
5.85	800
4.20	800
3.64	800
2.50	800

(42)Which of the following statements about the slope of the supply curve derived from the supply schedule in Table#2 above is true?

(a)Positive

(b)Inverse

(c)Horizontal

(d)None of the above

(43)The supply curve derived from the schedule in Table#2 above conforms to the law of supply:

(a)Yes

(b)No

(c)More information needed to respond

(d)None of the above

(44)Suppose an economist draws a negatively sloped demand curve across the “supply curve” derived from the schedule given in Table#2 above the point where the two curves intersect. Which of the following situation would result in the market for cherries?

(a)A shortage

(b)A glut

(c)An equilibrium

(d)None of the above

(45)Do the consumers in Q#44 above respond to the law of demand in the market for cherries?

(a)Yes

(b)No

(c)(a) or (b) above

(d)All of the above

(46)Which of the following statements best represents the change in Sydney’s demand curve for calculus books due to a decrease in the prices for these books given ceteris paribus?

(a)His original demand curve would shift to the left

(b)His original demand curve would shift to the right

(c)His original demand curve would remain unchanged

(d)None of the above

(47)Which of the following statements is true?

Suppose the supply curve for blueberries shifts outwardly to the right and the demand curve for blueberries remain unchanged, it would be correct for a microeconomist to conclude that:

(a)The new market equilibrium price is higher than the original equilibrium price

(b)The new market equilibrium price is lower than the original equilibrium price

(c)There is no change in the equilibrium price

(d)All of the above

(48)Suppose blueberry muffins are an inferior good, an increase in consumer income, other things being equal, would:

(a)Increase the demand for muffins

(b)Decrease the quantity demanded of muffins

(c)Decrease the demand for muffins

(d)Increase the quantity demanded of muffins

(49)Which of the following statements is false?

A market consequence of the establishment of a price floor program is that it will be:

(a)Too low, and an excess supply will result

(b)Too low, and a shortage will result

(c)Too high, and a shortage will result

(d)All of the above

(50)A minimum wage that is set below the equilibrium wage will:

(a)Cause unemployment to increase in a labor market

(b)Cause the overall wage to increase in labor market

(c)Have no effect on employment in labor market

(d)None of the above

(51)The excess supply created when governments impose a binding price floor is:

(a)Shrinking as the floor rises in the market

(b)The efficiency that results from higher prices for suppliers

(c)The difference between the quantity supplied and the quantity demanded

(d)All of the above

(52)Which of the following statements about binding price floors is false?

(a)They are generally set above the competitive equilibrium prices in markets

(b)Minimum wages for workers are examples of price floors

(c)They tend to cause excessive demand and shortage of supply in markets where they exist

(d)They are the lowest legislated prices that can be charged for resources in a market where they exist

(53)Which of the following statements about price ceilings is true?

(a)They are prices set by governments in markets

(b)They are also called maximum prices

(c)A binding price ceiling is generally set below the competitive equilibrium price in a market

(d)All of the above

(54)Which of the following statements is false?

(a)A price ceiling that is set by a government above the competitive equilibrium price does not prevent a market from reaching equilibrium

(b)A price ceiling that is set by a government below the competitive equilibrium price does not prevent a market from reaching equilibrium

(c)A price floor that is set by a government below the competitive equilibrium price does not prevent a market from reaching equilibrium

(d)According to neo-classical economists binding price floors and binding price ceilings create more problems than they solve in free markets and should be avoided

(55)Which of the following statements is false?

(a)A minimum wage law of $15 per hour is an example of a binding price ceiling

(b)A binding price ceiling is set above a competitive equilibrium price

(c)A non-binding minimum wage is set above the equilibrium wage rate in a labor market

(d)All of the above

(56)Which of the following statements is true?

If a government imposes a minimum price below the market equilibrium price for a good, then:

(a)There will be a surplus of the good being supplied

(b)The policy goal of the government is to benefit the producers of the good

(c)It is the lowest price that the producers of the good can charge under the law

(d)None of the above

(57)Suppose a government sets a pricing policy of $8 per ticket in a market for train tickets where the demand for these tickets is represented by the demand equation D=120-4P and the supply equation of these tickets is represented by S=90 +P, the government’s pricing policy could be aptly described as a:

(a)Binding price floor

(b)Non-Binding price floor

(c)Binding price ceiling

(d)None of the above

(58)Which of the following statements is true?

A minimum price for corn farmers in Iowa that is set above the equilibrium price in the market for corn seeks to:

(a)Discourage the production of corn

(b)Protect the incomes of corn farmers

(c)Decrease the production of corn

(d)All of the above

(59)Which of the following statements about the pricing policy adopted in Q#58 above is false?

(a)It is called a binding minimum price

(b)It is intended to benefit the corn farmers

(c)It is not a legally mandated price

(d)It is also called a binding price floor

(60)Which of the following statements is true?

A minimum wage law that stipulates $25 per hour for domestic workers in the state of Virginia is:

(a)A binding price ceiling

(b)A non-binding price floor

(c)Going to increase the rent of domestic workers

(d)Going to increase consumers’ surplus

(61)If Evadney’s willingness to pay price for a romantic novel is $50 but she pays $20 for the book, the difference between the indicated prices represents her:

(a)Producer surplus

(b)Willingness to pay price

(c)Reservation price

(d)None of the above

(62)Suppose Evadney’s reservation price remains unchanged as in Q#61 above but the actual price she pays for the novel is now $65, which of the following statements would be true?

(a)Her consumer surplus expands

(b)Her welfare declines

(c)Her consumer surplus is zero

(d)Her consumer surplus is unchanged

(63)What would Evadney’s willingness to pay price necessarily have to be in Q#62 above for her consumer surplus to be zero?

(a)$60

(b)$35

(c)$20

(d)None of the above

(64)Suppose the reservation price of consumers in the market for almond milk is $3.99 per quart and the market price that they pay is $5.75 per quart, then consumer surplus is going to be:

(a)Positive

(b)Negative

(c)Zero

(d)Any of the above

(65)There is a……………………relationship between the change in the price of a good and the change in……………….in a market.

(a)Direct, consumer surplus

(b)Direct, producer surplus

(c)Positive, consumer surplus

(d)Inverse, producer surplus

(66)Producers’ surplus is the difference between the________________________ for a good and the _______________________ for a good.

(a)Market price, maximum price

(b)Minimum acceptable price, maximum price

(c)Market price, minimum acceptable price

(d)Willingness to pay price, actual price

(67)Given ceteris paribus, the effect of an unfavorable change in a non-price parameter on the supply curve in a market for strawberries on consumer and producer surplus is to___________________

(a)Increase consumer surplus and producer surplus

(b)Decrease consumer surplus and producer surplus

(c)Decrease consumer surplus and increase producer surplus
(d)None of the above

(68)Consumers tend to maximize:

(a)Marginal utility

(b)Consumer surplus

(c)Total utility

(d)Savings

(69)Elasticity measures how “responsive” consumers are by measuring their change in______________ as the price of the product changes.

(a)Price

(b)Quantity demanded

(c)Income

(d)Attitude

(70)Within different price ranges along a linear demand curve, elasticity is:

(a)Equal

(b)Constant

(c)Different

(d)The same as slope

(71)If the price elasticity of demand for football tickets is estimated to be 2.8, then a 5 percent increase in football ticket prices would be expected to cause a:

(a)38 percent decrease in quantity demanded

(b)5 percent increase in quantity demanded

(c)14 percent decrease in quantity demanded

(d)24 percent increase in quantity demanded

(72)A microeconomist estimates that the price elasticity of demand for medical check-ups is 0.65. This suggests that the producers of medical check-ups could:

(a)Encourage more persons to visit doctors

(b)Advertise more to raise the price elasticity of demand

(c)Raise the price of medical check-ups to raise more revenue

(d)Maximize revenues by sticking to the current price

(73)Price elasticity of demand is defined as the ratio of the:

(a)Percentage increase in price to an increase in quantity demanded

(b)Unit change in quantity demanded to the dollar change in price

(c)Maximum amount that consumers will pay to increase quantity

(d)None of the above

(74)A perfectly inelastic demand curve has an elasticity coefficient of:

(a)1

(b)0.25

(c)?

(d)None of the above

(75)If the percentage change in the quantity supplied of a good is less than the percentage change in price, price elasticity of supply is:

(a)Inelastic

(b)Perfectly inelastic

(c)Elastic

(d)Unitary elastic

(76)In order to prove that ginger tea and mint tea are substitutes, microeconomists should test the------------------------------and get a-------------------------------.

(a)Price elasticity of demand; positive number

(b)Price elasticity of supply; negative number

(c)Cross price elasticity of demand; positive number

(d)Income elasticity of demand; negative number

(77)Suppose that the quantity of oranges sold increases by 45 percent when the price of tangerines increases by 25 percent. What is the coefficient of cross price elasticity of demand for these fruits?

(a)2.5

(b)3.2

(c)1.8

(d)0.3

(78)Given the coefficient of cross price elasticity of demand for the fruits in Q#77 above, which of the following statements is true?

(a)They are complements

(b)Their demand curve is negatively sloped

(c)Their cross elasticity of demand is negative

(d)None of the above

(79)Which of the following statements is true?

In the very short run period:

(a)The price elasticity of supply is very elastic

(b)The price elasticity of demand is very elastic

(c)The price elasticity of supply is very inelastic

(d)Income elasticity of demand is perfectly elastic

(80)If an excise tax is placed on the producer of a product that has a perfectly inelastic demand, given ceteris paribus then:

(a)The entire tax will be paid by the producer

(b)The consumer and producer will equally share the burden of the tax

(c)The entire tax will be paid by the consumer

(d)More information is needed to determine the tax incidence

(81)Suppose you are a member of a local soccer club. The goal of your soccer club is to increase the amount of revenue earned from ticket sales in the local competition. Two executives of the soccer club, Evadney and Felix suggest that the solution is to increase ticket prices. Are Evadney and Felix correct?

(a)They are correct if the demand for tickets is price elastic

(b)They are correct if the demand for tickets is unitary elastic

(c)They are correct if the demand for tickets is price inelastic

(d)They are incorrect if the demand for tickets is price inelastic`

(82)For which of the following medical services is the income elasticity of demand largest?

(a)Emergency services after a car accident

(b)Flu shots

(c)Breast enhancements

(d)Medical tests to diagnose specific symptoms

(83)If the income elasticity of demand for undergarments is estimated by economists to be 6.85 in a given market, it would be plausible to conclude that undergarments:

(a)Have a steep and negatively sloped demand curve

(b)Have a horizontal demand curve

(c)Are normal goods

(d)Are Giffen goods

(84)Which of the following statements is true?

Suppose CD players are classified as normal goods then it would be expected that:

(a)Consumers buy less when the price falls and vice versa

(b)Consumers buy less when income rises and vice versa

(c)Consumers buy more when income rises and vice versa

(d)More information needed to answer this question

(85)Suppose the chairman of the board of a supermarket chain proposes that a 12 percent increase in the prices of their breakfast cereals will cause revenues for the supermarket chain to decrease. It can be inferred that the chairman thinks that the demand for breakfast cereals is:

(a)Inelastic

(b)Elastic

(c)Inelastic, but not perfectly inelastic

(d)Elastic, but not perfectly elastic

(86)Which of the following statements is false?

(a)Consumers with an elastic demand for a service will not bear the burden of a tax if the suppliers of a good have an inelastic supply

(b)Suppliers with an inelastic supply for a service will not bear the burden of a tax if the consumers of a good have an elastic demand

(c)Suppliers with an inelastic demand for a service will bear the burden of a tax if the consumers of a good have a perfectly elastic demand

(d)Consumers with an inelastic demand for a service will share the burden of a tax if the suppliers of a good have an inelastic supply

(87)Factor markets are those markets in which business firms:

(a)Sell their finished commodities

(b)Buy their finished commodities

(c)Buy factors of production

(d)Sell the labor services of their executives

(88)Economic profit is:

(a)Always less than zero

(b)Never less than accounting profit

(c)Less than accounting profit if implicit costs are greater than zero

(d)Less than accounting profit if implicit costs are zero

(89)Economic profit equals accounting profits minus:

(a)Explicit costs

(b)Fixed costs

(c)Implicit costs

(d)Variable costs

(90)Which of the following statements is false?

A LLC firm is a:

(a)Partnership of two or more business partners

(b)Profit maximizer and cost minimizer

(c)Participant in factor markets and commodity markets

(d)None of the above

(91)When the slope of a firm’s iso-quant is equal to the slope of its iso-cost line, microeconomists say that the firm experiences:

(a)A negative profit

(b)A normal profit

(c)Technical efficiency

(d)None of the above

(92)Which of the following statements is false?

In the short-short run a firm:

(a)Incurs only fixed costs

(b)Its average costs are its average fixed costs

(c)Its marginal costs are also fixed

(d)Its total costs are its total fixed costs

Table#3-Cost Schedule for Producing Vegan Pizzas

Vegan Pizzas	Fixed Cost	Variable Cost	Marginal Cost
0	$	$	$
1			48
2		27
3		15
4			78
5	40
6		64
7		80

(93)The average fixed cost incurred by “Vegan Pizza Experts” for producing four (4) pizzas in Table#3 above is:

(a)$9.50

(b)$10

(c)$40

(d)$78

(94)The average total cost of “Vegan Pizza Experts” for producing four (4) pizzas in Table#3 above is equal to:

(a)$104

(b)$40

(c)$6.67

(d)None of the above

(95)Sydney and Felix are carpenters who own a small workshop where beds are made. At the end of a given month, they have 250 beds. Their expenses for the first month are $2,000 for rent, $6,000 for wages, $1,500 for lumber and varnish, and $500 for electricity. Their total variable costs for the month are:

(a)$10,000

(b)$8,000

(c)$7500

(d)$32 per bed

Table#4-Workers and Production Data

Laborers	Total Product
0	0
1	8
2	20
3	25
4	28
5	29

(96)In Table#4, diminishing returns set in when the ------------worker is hired.

(a)1st

(b)2nd

(c)3rd

(d)4th

(97)A biochemist resigned his job where he earned $150,000 annually to work full-time in his own consulting business. In the first year, he had total revenue of $600,000 and business expenses of $350,000. He made a (an):

(a)Economic profit

(b)Implicit revenue

(c)Accounting profit and economic profit

(d)Accounting loss but not an economic loss

(98)Which of the following statements is true?

Profit maximization means that:

(a)The MC curve of a profit maximizing firm must increase and cuts its MR curve from above at the firm’s maximum output

(b)The MC curve of a profit maximizing firm lies below its MR curve then rises and cuts its MR curve from below at its profit maximizing price and output levels

(c)The MC curve of a profit maximizing firm must decline and cuts its MR curve from above at the firm’s profit maximizing output level

(d)None of the above

(99)Freddie quits his job as an airline pilot and opens his own pilot training school. He was earning $40,000 as a pilot. He withdraws $10,000 from his savings where he was earning 6 percent interest and uses the money in his new business. He uses a building he owns as a hanger and could rent it out for $5,000 per year. He rents a computer for $1,200, buys office supplies for $500, rents an airplane for $6,000, pays $1,300 for fuel and maintenance, and hires one worker for $30,000. Freddie’s total revenue from pilot training classes equaled $90,400; Freddie’s implicit costs for this year are equal to:

(a)$55,000

(b)$84,400

(c)$39,000

(d)$45,600

(100)Which of the following statements is true?

Decreasing returns to scale:

(a)Is another name for diminishing marginal returns

(b)Means that a doubling of a firm’s factor resources causes a tripling of its output

(c)Occurs in the short run

(d)None of the above