ECN 2110 Week 4 Quiz

ECN 2110 Week 4 Quiz | Baker College

Module 4 Quiz

Question 1

In economics, a firm that faces no competitors is referred to as _________________.

·         an oligopoly

·         a monopoly

·         a perfect competitor

·         an oligopolizor

Question 2

____________________________ occur when the marginal gain in output diminishes as each additional unit of input is added.

·         Diminishing variable returns

·         Diminishing average returns Correct!

·         Diminishing marginal returns

·         Diminishing marginal costs

Question 3

In order to reduce the harmful effects of recession and carbon emissions, the government provided tax incentives for manufacturing firm's to ___________________ that provide alternative, more efficient methods of combining inputs to produce output.

·         acquire energy efficient production technologies

·         increase the returns to scale

·         maintain constant returns to scale

·         create perfect competition between firms

Question 4

In microeconomics, the term ___________________ is synonymous with decreasing returns of scale.

·         monopoly

·         economies of scale

·         diminishing returns

·         diseconomies of scale

Question 5

According to the definition of profit, if a profit-maximizing firm will always attempt to produce its desired level of output at the lowest possible cost, then it will

·         do so regardless of what type of competition exists in a market.

·         take a long-run perspective on costs, when such costs cannot be adjusted.

·         take a short-run perspective on labor costs which cannot be immediately changed.

·         breakdown its cost structure according to short-run adjustments.

Question 6

Marcella operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Marcella requires to operate her business. Which is it?

·         physical space for the gallery

·         costs of purchasing art work to sell in the gallery

·         wages paid to three part-time employees

·         accountant's fees for preparing tax returns

Question 7

The table below sets out cost information for the production of volley balls. Some values are missing. Which of the following statements is correct?

Quantity              Variable Cost     Fixed Cost           Total Cost            Average Variable Cost ($ per unit)            Marginal Cost ($per unit)

0              0              30           30           0              -

1              12                           B             12           E

2              25                           C             D             F

3              A                             72           14           G

·         A = 42; E = 40

·         A = 70; E = 40

·         A = 42, E = 12

·         A = 70; E = 12

Question 8

I’MABigCorp. produces and sells kitchen wares. Last year, it produced 7,000 can openers and sold each one for $6. To produce the 7,000 can openers, the company incurred variable costs of $28,000 and a total cost of $45,000.  I'MABIGCorp.'s average fixed cost to produce the 7,000 can openers was

·         $1.50

·         $1.23

·         $2.25

·         $2.43

Question 9

Whatever the firm’s quantity of production, _____________ must exceed total costs if it is to earn a profit.

·         marginal costs

·         average costs

·         total revenue

·         variable costs

Question 10

When __________________ exist, doubling of all inputs will result in more than doubling output, which means __________________________________________.

·         economies of scale; a larger factory can produce at a lower average cost than a smaller company.

·         economies of scale; a smaller factory can produce at a lower average cost than a larger company.

·         low labor inputs; larger scale of production leads to higher costs.

·         labor inputs; economies-of-scale curve is U-shaped.