Texas A&M ECON 562 Exam_2 MCQs

| November 9, 2018

Grade Details1. Question : A production function Student Answer: Shows how inputs are affected by output Relates how a change in an input affects other output. Shows maximum output from a given set of inputs Shows maximum output from a given set of inputs, given technology Points Received: 1 of 1 Comments: 2. Question : Production always occurs in the long run Student Answer: True False Points Received: 1 of 1 Comments: 3. Question : Production elasticity Student Answer: measure how a % change in output affect the %change in an input Is not important for a company that makes a physical product Measure the % change in output for a % change in an input Is given by the exponent on the input in a linear production function Points Received: 0 of 1 Comments: 4. Question : How do you determine the optimal amount of labor to use when labor is the only variable input? Student Answer: MPL = CL MPL = MPK MPL / MPK = 1 None of the above Points Received: 1 of 1 Comments: 5. Question : The optimal usage of two variable inputs is determined by: Student Answer: The Iso-quant for the production process MPK= MRTS MPK= MRTS None of the above Points Received: 1 of 1 Comments: 6. Question : Given the production function: : Q = .6 L.5 K.1 M.1, what returns to scale to scale are implied? Student Answer: Equal returns Increasing returns Constant returns Decreasing Returns Points Received: 1 of 1 Comments: 7. Question : Given the production function: Q = .6 L2 M2 – .10 L3 M3 , determine the number of units of L that maximize total product, given m is held is constantat 10. Student Answer: L =6 L =8 L=4 L=2.5 None of the above Points Received: 0 of 1 Comments: 8. Question : Economic costs do not include the explicit costs but only opportunity costs Student Answer: True False Points Received: 1 of 1 Comments: 9. Question : A company should produce at the lowest point on the long run average cost curve Student Answer: True False Points Received: 0 of 1 Comments: 10. Question : Assume that a long run average cost curve is “U” shaped Student Answer: The downward part of the “U” shaped curve is caused by the diminishing marginal productivity The upward part of the “U” shaped curve is caused by the diminishing marginal productivity The downward part of the “U” shaped curve is represents larger plant capacity than does the upward part. None of the above Points Received: 1 of 1 Comments: 11. Question : Given TC = 123 + 55Q – 5Q^2 at Q = 4. Then MC is: Student Answer: 5 10 15 20 Points Received: 1 of 1 Comments: 12. Question : If expected sales is 2,300 units and the standard deviation is 150. What is the probability of an operating loss? Student Answer: 2.28% 15.87% 50% Not enough information Points Received: 1 of 1 Comments: 13. Question : Analysis of a company’s cost structure reveals fixed costs of $1300 per month; variable cost per unit is $9.00 per hour (this is a service company) and the price charged is at $15.00 per hour. What is the break-even number of hours per month? (Rounded to the nearest hour). Student Answer: 200 160 217 222 Points Received: 1 of 1 Comments: 14. Question : 14. Given the information of 13 above. What is the degree of operating leverage at 480 hours per month? Student Answer: 2.8828 1.8228 2.4428 None of the above Points Received: 1 of 1 Comments: 15. Question : A process has a 60% learning curve. Assume input costs for the first unit produced is $1000. The input cost of the fourth unit will be: Student Answer: 420 360 660 None of the above Points Received: 0 of 1 Comments: 16. Question : In the market structure called monopolistic competition Student Answer: Very little advertising will occur There are only a few companies in the industry These industries offer only few products. None of the above Points Received: 0 of 1 Comments: 17. Question : In a purely competitive industry Student Answer: Products are differentiated A large amount of advertising occurs Price will be higher than in other market structure None of the above Points Received: 0 of 1 Comments: 18. Question : A used lawn mower is an example of Student Answer: a search good an experience good a homogenous good None of the above Points Received: 1 of 1 Comments: 19. Question : The problem of asymmetric can be overcome by Student Answer: Reputation Brand name Warranties All of the above None of the above Points Received: 0 of 1 Comments: 20. Question : A monopolist will always charge a higher price than a purely competitive industry Student Answer: True False Points Received: 0 of 1 Comments: 21. Question : Given TC = 10 + 5Q, ED = -2, what price will a monopolist charge? Student Answer: 5 12 8 10 None of the above Points Received: 1 of 1 Comments: 22. Question : The monopolist determines optimal output the same way as does a purely competitive industry Student Answer: True False Points Received: 1 of 1 Comments: 23. Question : Given a company with some monopoly power and Ed=3, the optimal markup is Student Answer: 33% 50% 72% None of the above Points Received: 0 of 1 Comments: 24. Question : Given the information given in 23 above and MC=6, gross margin is Student Answer: 50% 42% 33% 38% None of the above Points Received: 0 of 1 Comments: 25. Question : You would expect gross margin in a store brand to be higher than gross margin in a brand name product Student Answer: True False Points Received: 1 of 1 Comments: 26. Question : You expect products that are less price elastic to have lower gross margins than products with greater price elasticity Student Answer: True False Points Received: 0 of 1 Comments: 27. Question : A company with large gross margins will have larger profits most of the time Student Answer: True False Points Received: 1 of 1 Comments: 28. Question : If a company is incurring losses, it should stop operating Student Answer: Yes No Not enough information Points Received: 1 of 1 Comments: 29. Question : A monopolist may not change the highest price they could get (at MR=MC) in the short run Student Answer: True False Points Received: 1 of 1 Comments: 30. Question : All price discrimination is illegal Student Answer: True False Points Received: 1 of 1 Comments: 31. Question : A company that faces different levels of demand Student Answer: Must charge the same price to all customers is violating the law Can charge different price to customers Points Received: 1 of 1 Comments: 32. Question : Patents allow a company the exclusive right to act as a monopolist Student Answer: This is not justified economically It is justified economically Points Received: 1 of 1 Comments: 33. Question : This test covered material discussed on webinars Student Answer: True False Points Received: 1 of 1 Comments:

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