Question 1

Payments to an input above the supplier's reservation price are termed

Accepted Answer

A)  economic rent. 
B)  economic profit. 
C)  accounting rent. 
D)  implicit rent. 
E)  input surplus. 
A)  economic rent. 
B)  economic profit. 
C)  accounting rent. 
D)  implicit rent. 
E)  input surplus.

Question 2

When a firm is facing diseconomies of scale,total cost will

Accepted Answer

A)  decrease as the firm increases its output. 
B)  increase at a decreasing rate as the firm increases its output. 
C)  decrease at an increasing rate as the firm increases its output. 
D)  increase at an increasing rate as the firm increases its output. 
E)  increase proportionately to output. 
A)  decrease as the firm increases its output. 
B)  increase at a decreasing rate as the firm increases its output. 
C)  decrease at an increasing rate as the firm increases its output. 
D)  increase at an increasing rate as the firm increases its output. 
E)  increase proportionately to output.

Question 3

Harvey quit his job at the University of Toronto where he earned $45,000 a year,the same as other employees of normal ability,the same as other employees of normal ability.But Harvey is unusually talented in another area,and he figures his entrepreneurial talent,or forgone entrepreneurial income,to be $5000 a year.He cashed in $100,000 in bonds that earned 10% interest annually to buy a software company,Extreme Gaming.In the first year,the firm sold 11,000 units of software at $75 per unit.Of the $75 per unit,$55 goes for the costs of production,packaging,marketing,employee wages and benefits,and rent on a building.
-Refer to the above information.The economic profit in the first year was

Accepted Answer

A)  $50,000. 
B)  $70,000. 
C)  $160,000. 
D)  $220,000. 
E)  $250,000. 
A)  $50,000. 
B)  $70,000. 
C)  $160,000. 
D)  $220,000. 
E)  $250,000.

Question 4

If all firms in a perfectly competitive industry are experiencing economic losses,then firms will

Accepted Answer

A)  enter the industry,seeking new opportunities. 
B)  exit the industry,stopping when accounting profits equal zero. 
C)  continue in the industry,hoping for better times. 
D)  exit the industry,stopping when economic profits equal zero. 
E)  exit the industry,stopping when economic profits are positive. 
A)  enter the industry,seeking new opportunities. 
B)  exit the industry,stopping when accounting profits equal zero. 
C)  continue in the industry,hoping for better times. 
D)  exit the industry,stopping when economic profits equal zero. 
E)  exit the industry,stopping when economic profits are positive.

Question 5

-Use the data in the table above.An economist would say that the total cost of producing 15 units of output is

Accepted Answer

A)  $6. 
B)  $63. 
C)  $69. 
D)  $75. 
E)  $81. 
A)  $6. 
B)  $63. 
C)  $69. 
D)  $75. 
E)  $81.

Question 6

It is always true that

Accepted Answer

A)  accounting profit is positive. 
B)  economic profit is zero. 
C)  economic profit exceeds accounting profit. 
D)  economic profit is positive. 
E)  accounting profit exceeds economic profit. 
A)  accounting profit is positive. 
B)  economic profit is zero. 
C)  economic profit exceeds accounting profit. 
D)  economic profit is positive. 
E)  accounting profit exceeds economic profit.

Question 7

An increase in consumer demand for espresso would lead to a(n)

Accepted Answer

A)  decrease in quantity supplied. 
B)  decrease in supply. 
C)  increase in quantity supplied. 
D)  increase in supply. 
E)  decrease in the price of espresso. 
A)  decrease in quantity supplied. 
B)  decrease in supply. 
C)  increase in quantity supplied. 
D)  increase in supply. 
E)  decrease in the price of espresso.

Question 8

-Use the data in the table above.An accountant would say that the total cost of producing 15 units of output is

Accepted Answer

A)  $36. 
B)  $63. 
C)  $69. 
D)  $125. 
E)  $161. 
A)  $36. 
B)  $63. 
C)  $69. 
D)  $125. 
E)  $161.

Question 9

-Use the data in the table above.Suppose that all the firms in this industry have identical costs to this firm and are producing 15 units of output.One can predict that

Accepted Answer

A)  new firms will enter the industry. 
B)  old firms will exit the industry. 
C)  the number of firms in the industry is stable. 
D)  the price must rise. 
E)  firms will attempt to lower their implicit costs. 
A)  new firms will enter the industry. 
B)  old firms will exit the industry. 
C)  the number of firms in the industry is stable. 
D)  the price must rise. 
E)  firms will attempt to lower their implicit costs.

Question 10

In an environment of free entry and exit,the presence of positive economic profits in an industry

Accepted Answer

A)  indicates a market failure. 
B)  can never occur. 
C)  induces a reallocation of resources out of other industries and into the one with positive economic profit. 
D)  can be sustained indefinitely. 
E)  allows one firm to dominate the industry. 
A)  indicates a market failure. 
B)  can never occur. 
C)  induces a reallocation of resources out of other industries and into the one with positive economic profit. 
D)  can be sustained indefinitely. 
E)  allows one firm to dominate the industry.

Question 11

Explicit costs

Accepted Answer

A)  measure the opportunity costs of the business owners. 
B)  are always fixed in the short run. 
C)  measure the payments made to the firm's factors of production. 
D)  are always variable in the short run. 
E)  determine accounting profit but not economic profit. 
A)  measure the opportunity costs of the business owners. 
B)  are always fixed in the short run. 
C)  measure the payments made to the firm's factors of production. 
D)  are always variable in the short run. 
E)  determine accounting profit but not economic profit.

Question 12

A new production technique that reduces costs for a price-taking firm in a competitive market will result in

Accepted Answer

A)  widespread industry adoption and a lower price to consumers. 
B)  industry consolidation. 
C)  sustained positive economic profit for the first firms that adopt the technique. 
D)  a rightward shift in the demand curve. 
E)  entry by new firms. 
A)  widespread industry adoption and a lower price to consumers. 
B)  industry consolidation. 
C)  sustained positive economic profit for the first firms that adopt the technique. 
D)  a rightward shift in the demand curve. 
E)  entry by new firms.

Question 13

Right Panel: The market: a shift of short-run supply in response to an increase in demand.  
-Refer to the diagrams above.If the market demand for wheat and the market supply of wheat are represented by D and SRS,respectively,we expect

Accepted Answer

A)  the firm to raise the market price to increase profit. 
B)  the firm to increase production as large as possible to increase profit. 
C)  new firms to enter the industry. 
D)  some existing firms to exit the industry. 
E)  neither new entry nor exit of existing firms. 
A)  the firm to raise the market price to increase profit. 
B)  the firm to increase production as large as possible to increase profit. 
C)  new firms to enter the industry. 
D)  some existing firms to exit the industry. 
E)  neither new entry nor exit of existing firms.

Question 14

Most markets in North America

Accepted Answer

A)  have significant barriers to entry. 
B)  possess a high degree of free entry. 
C)  have minor barriers to entry. 
D)  are close to monopolies. 
E)  inefficiently allocate resources. 
A)  have significant barriers to entry. 
B)  possess a high degree of free entry. 
C)  have minor barriers to entry. 
D)  are close to monopolies. 
E)  inefficiently allocate resources.

Payments to an input above the supplier's reservation price are termed

When a firm is facing diseconomies of scale,total cost will

If all firms in a perfectly competitive industry are experiencing economic losses,then firms will

-Use the data in the table above.An economist would say that the total cost of producing 15 units of output is

It is always true that

An increase in consumer demand for espresso would lead to a(n)

-Use the data in the table above.An accountant would say that the total cost of producing 15 units of output is

-Use the data in the table above.Suppose that all the firms in this industry have identical costs to this firm and are producing 15 units of output.One can predict that

In an environment of free entry and exit,the presence of positive economic profits in an industry

Explicit costs

A new production technique that reduces costs for a price-taking firm in a competitive market will result in

Right Panel: The market: a shift of short-run supply in response to an increase in demand. -Refer to the diagrams above.If the market demand for wheat and the market supply of wheat are represented by D and SRS,respectively,we expect

Most markets in North America

Thinking Like an Economist

Comparative Advantage: the Basis for Exchange

Supply and Demand: an Introduction

Demand: the Benefit Side of the Market

Perfectly Competitive Supply: the Cost Side of the Market

The Quest for Profit and the Invisible Hand

Monopoly and Other Forms of Imperfect Competition

Thinking Strategically

Externalities and Property Rights

The Economics of Information

Labour Markets

The Economics of Public Policy

Public Goods and Taxation

Income Distribution

Filters

Exam 6: Efficiency and Exchange

Payments to an input above the supplier's reservation price are termed

When a firm is facing diseconomies of scale,total cost will

If all firms in a perfectly competitive industry are experiencing economic losses,then firms will

-Use the data in the table above.An economist would say that the total cost of producing 15 units of output is

It is always true that

An increase in consumer demand for espresso would lead to a(n)

-Use the data in the table above.An accountant would say that the total cost of producing 15 units of output is

-Use the data in the table above.Suppose that all the firms in this industry have identical costs to this firm and are producing 15 units of output.One can predict that

In an environment of free entry and exit,the presence of positive economic profits in an industry

Explicit costs

A new production technique that reduces costs for a price-taking firm in a competitive market will result in

Right Panel: The market: a shift of short-run supply in response to an increase in demand. -Refer to the diagrams above.If the market demand for wheat and the market supply of wheat are represented by D and SRS,respectively,we expect

Most markets in North America

Thinking Like an Economist

Comparative Advantage: the Basis for Exchange

Supply and Demand: an Introduction

Demand: the Benefit Side of the Market

Perfectly Competitive Supply: the Cost Side of the Market

The Quest for Profit and the Invisible Hand

Monopoly and Other Forms of Imperfect Competition

Thinking Strategically

Externalities and Property Rights

The Economics of Information

Labour Markets

The Economics of Public Policy

Public Goods and Taxation

Income Distribution

Filters