ECO 550 Final Exam

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Question 1

4 out of 4 points

Break-even analysis usually assumes all of the following except:

Selected Answer:

in the short run, there is no distinction between variable and fixed costs.

Correct Answer:

in the short run, there is no distinction between variable and fixed costs.

· Question 2

4 out of 4 points

The short-run cost function is:

Selected Answer:

relevant to decisions in which one or more inputs to the production process are fixed

Correct Answer:

relevant to decisions in which one or more inputs to the production process are fixed

· Question 3

4 out of 4 points

George Webb Restaurant collects on the average $5 per customer at its breakfast & lunch diner. Its variable cost per customer averages $3, and its annual fixed cost is $40,000. If George Webb wants to make a profit of $20,000 per year at the diner, it will have to serve__________ customers per year.

Selected Answer:

30,000 customers

Correct Answer:

30,000 customers

· Question 4

4 out of 4 points

In the linear breakeven model, the difference between selling price per unit and variable cost per unit is referred to as:

· Question 5

4 out of 4 points

In a study of banking by asset size over time, we can find which asset sizes are tending to become more prominent. The size that is becoming more predominant is presumed to be least cost. This is called:

· Question 6

4 out of 4 points

Which of the following is not an assumption of the linear breakeven model:

· Question 7

4 out of 4 points

What is the profit maximization point for a firm in a purely competitive environment?

· Question 8

4 out of 4 points

If price exceeds average costs under pure competition, _ firms will enter the industry, supply will , and price will be driven ___.

· Question 9

4 out of 4 points

In the purely competitive case, marginal revenue (MR) is equal to:

· Question 10

4 out of 4 points

Under asymmetric information,

· Question 11

4 out of 4 points

Buyers anticipate that the temporary warehouse seller of unbranded computer equipment will

· Question 12

4 out of 4 points

Experience goods are products or services

· Question 13

4 out of 4 points

A firm in pure competition would shut down when:

· Question 14

4 out of 4 points

In the electric power industry, residential customers have relatively _ demand for electricity compared with large industrial users. But contrary to price discrimination, large industrial users generally are charged _ rates.

· Question 15

4 out of 4 points

In natural monopoly, AC continuously declines due to economies in distribution or in production, which tends to found in industries which face increasing returns to scale. If price were set equal to marginal cost, then:

· Question 16

4 out of 4 points

__ as practiced by public utilities is designed to encourage greater usage and therefore spread the fixed costs of the utility’s plant over a larger number of units of output.

· Question 17

4 out of 4 points

Of the following, which is not an economic rationale for public utility regulation?

· Question 18

4 out of 4 points

When the cross elasticity of demand between one product and all other products is low, one is generally referring to a(n) __ situation.

· Question 19

4 out of 4 points

Declining cost industries

· Question 20

4 out of 4 points

Some market conditions make cartels MORE likely to succeed in collusion. Which of the following will make collusion more successful?

· Question 21

4 out of 4 points

In a kinked demand market, whenever one firm decides to lower its price,

· Question 22

4 out of 4 points

In the Cournot duopoly model, each of the two firms, in determining its profit-maximizing price-output level, assumes that the other firm’s __ will not change.

· Question 23

4 out of 4 points

A(n) __ is characterized by a relatively small number of firms producing a product.

· Question 24

4 out of 4 points

A cartel is a situation where firms in the industry

· Question 25

4 out of 4 points

“Conscious parallelism of action” among oligopolistic firms is an example of __.