ECO402 Final Term Quizzes

Eco 402 Final Term Quizez

Q1. The "perfect information" assumption of perfect competition includes all of the following except one. Which one?

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.

Q6. 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:

that good.

Q8. The "perfect information" assumption of perfect competition includes all of the following except one. Which one?

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.

Quiz 2

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.