Question

30-)

Economists assume that business firms are trying to maximize:

Select one:

a. quantity of outputs

b. the value of outputs

c. the difference between outputs and inputs

d. the difference between the value of outputs and the value of inputs

36-)

Which one is true?

Select one:

a. None.

b. If the price elasticity of demand is bigger than one, and increase in price leads to a decrease in total revenue.

c. Variable cost is the cost of the explicit and implicit resources that are foregone when a decision is made.

d. Price ceilings on gasoline prices in the 1970s is a good example of minimum pricing.

37-)

Which one is false?

Select one:

a. Under monopolistic competition the goods/services produced by the firms are different.

b. In both perfectly competitive and monopolistically competitive markets, in the long run profit equals zero and at the profit maximizing output level, all firms have MC = ATC (marginal cost= average total cost).

c. Under oligopolistic markets, the goods/services produced could be homogenous or differentiated.

d. In both perfectly competitive and monopolistically competitive markets, there is free entry and exit

38-)

The firm’s AVC (Average Variable Cost) is at its minimum when:

Select one:

a. Average Total Cost = Average Variable Cost

b. marginal product is at its maximum

c. Average Total Cost = Marginal Cost

d. Average Variable Cost = Marginal Cost

40-)

If a government were to fix a minimum wage for adult workers, economists would predict

Select one:

a. less young workers would be employed.

b. the costs and prices of firms employing cheap labour would increase.

c. there would be more unemployment.

d. wages in general would fall as employers tried to hold down costs.

Answer 1

1

The difference between the value of outputs and the value of inputs

This positive difference of the value of outputs and inputs are the profit of the firm

2.

None

Option 2 is incorrect because the value needs to be less than - 1. Option 3 is incorrect as variable costs are explicit costs. Otption 4 is an not an example of minimum pricing.

3. Average Variable Cost = Marginal Cost

The marginal cost intersects the average variable cost at its minimum.

4. C there would be more unemployment

A minimum wage policy will increase the cost of labour and thus push companies to hire less.

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