ECON 103 Midterm Quiz - The first stage of the production

question:Midterm Quiz - Week 4 - Quiz MD ECON 103

Question 1

(1 point)

The first stage of the production function occurs when the firm experiences

Question 1 options:

a. negative returns.

b. constant returns.

c.diminishing returns.

d. increasing returns.

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Question 2

(1 point)

Which of these factors does NOT affect the supply of shoes?

Question 2 options:

a. a change in the price of shoes.

b.A change in the cost of leather.

c. A government tax or subsidy on shoe production.

d. Lower costs of shoe-making equipment.

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Question 3

(1 point)

An oligopoly is characterized by

Question 3 options:

a. A small number of buyers who collectively set a purchase price.

b.A large number of relatively small firms who collude on supply and price.

c.A small number of relatively large firms, each with substantial control of the market.

d.A single large firm that dominates the market and determines the market price.

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Question 4

(1 point)

The tragedy of the commons

Question 4 options:

a. describes the gradual shift from individual to communal grazing rights.

b.can be successfully solved by allowing individuals to follow their self-interest, without a need for government intevention.

c.followed from excessive government interference in the maintenance of the commons.

d.occurred because no one person owned the commons, so no one had the incentive to take care of it.

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Question 5

(1 point)

Which of these conditions does NOT characterize perfect competition?

Question 5 options:

a. a large number of buyers and sellers act independently.

b. firms produce identical products and are "price takers."

c. information is "imperfect," allowing individuals or firms to pay more for products than their costs of production.

d. individuals are motivated by self-interest, not societal welfare.

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Question 6

(1 point)

Which of the following is an example of fixed costs for a business?

Question 6 options:

a.hourly wages.

b.cost of business license.

c. fees for customer credit card charges.

d. gasoline for company vehicle.

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Question 7

(1 point)

A cap and trade policy is desirable because it

Question 7 options:

a. Reward firms for reducing pollution.

b.has proven to be an inefficient way to reduce pollution

c. is not a market-based solution to pollution.

d. punishes all firms equally.

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Question 8

(1 point)

Which situation describes the increasing returns stage of the production function?

Question 8 options:

a.Hiring one more tailor results in three more suits produced per hour.

b. Hiring one more baker results in the same output because there is now less than one oven available per baker.

c.Buying one more office computer causes there to be more computers than workers.

d.Extending the workday results in more tired and less productive workers.

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Question 9

(1 point)

The amount of pollution and the cost of pollution abatement are optimal when

Question 9 options:

a. The marginal social benefit of production is less than the marginal social cost of production.

b. The marginal social benefit of production equals the marginal social cost of production.

c. The marginal social benefit of production exceeds the marginal social cost of production.

d. The marginal social benefit of production equals the marginal cost of production.

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Question 10

(1 point)

If the supply of a product is inelastic, then

Question 10 options:

a 25 percent change in price will lead to more than 25 percent change in quantity supplied.

a 25 percent change in price will lead to a 100 percent change in quantity supplied

a 25 percent change in price will lead to less than 25 percent change in quantity supplied

a 25 percent change in price will lead to a 25 percent change in income.

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Question 11

(1 point)

Which of these strategies would NOT solve the tragedy of the commons?

Question 11 options:

a. Encourage local solutions to the tragedy of the commons.

b.Solve it through communal ownership.

c.Divide the commons and allow private ownership of each share.

d. Government takes ownership of the commons.

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Question 12

(1 point)

An accountant describes profit as __________ while an economist describes it as _______________.

Question 12 options:

a. Total revenue minus total cost; total revenue minus total cost minus opportunity cost.

b. Total revenue minus variable cost; total revenue minus variable cost minus opportunity cost.

c. Total revenue minus fixed; total revenue minus fixed cost minus opportunity cost.

a. Total revenue minus total cost minus opportunity cost; total revenue minus total cost.

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Question 13

(1 point)

In the long-run, firms can

Question 13 options:

a.enter or exit an industry.

b.only hire more of only one input, such as labor.

c.continue to produce at a loss, while hoping for the recession to end.

d. none of the above.

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Question 14

(1 point)

Markets are more efficient when information is perfect; an example is:

Question 14 options:

a. insider information on the release of a new block-buster drug.

b. CARFAX reports that reveal the accident and repair history of a used car.

c. a fortune-tellers prediction of future interest rate movements.

d. a readily available archive of historical weather reports.

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Question 15

(1 point)

Which of the following is an example of allocative efficiency?

Question 15 options:

a. Consumers minimize their utility.

b.Consumers minimize production efficiency.

c. Producers maximize their costs of production.

d. In the long run, producers pay the least cost to produce their goods.

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Question 16

(1 point)

Which of these describes the marginal product of labor?

Question 16 options:

a. the total output of all workers.

b. the additional output after hiring one more worker and buying her the necessary tools and equipment.

c. the additional output after hiring one more worker.

d. the additional output after equipping workers with upgraded tools.

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Question 17

(1 point)

The law of demand states that

Question 17 options:

a.with an increase in the price, the quantity demanded increases.

b.with an increase in the price, the quantity demanded decreases.

c.quantity demanded does not change with any increase in price.

d. with an increase in price, demand decreases.

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Question 18

(1 point)

The cost of going to college is a major expense for many of us. What is often the largest opprtunity cost?

Question 18 options:

tuition at a state university

the foregone earnings (or leisure time) of the student

textbooks

transportation to and from class

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Question 19

(1 point)

Which of the following is an example of a command economy?

Question 19 options:

a. hunter-gatherer systems.

b. decisions by individuals to satisfy their own self-interest.

c. centralized decision-making by the Chinese government.

d. "sin taxes" on alcohol and tobacco.

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Question 20

(1 point)

Which is an example of the subsitution effect on demand?

Question 20 options:

a. the price of bread rises, so you buy less bread.

b. The price of bread rises, so you buy more bread.

c. the price of bread rises, so you buy less bread and more dinner rolls.

d. the price of bread rises, but you buy the same amount of bread.