Econ202 Exam 2 Correct Solutions

EXAM 2 Review Biology Questions
October 11, 2019
Graeter’s Grows Through Good Management
October 13, 2019

Econ202 Exam 2 Solutions

Question 1

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When a firm does more of something, it gets better at it. This learning-by-doing is:

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Question 2

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Answer the next question(s) on the basis of the following output data for a firm. Assume that the amounts of all non-labor resources are fixed.

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Refer to the above data. Diminishing marginal returns become evident with the addition of the:

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Question 3

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The short run is characterized by:

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Question 4

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Refer to the above diagram. At output level Q total cost is:

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Question 5

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Refer to the above diagram. The vertical distance between ATC and AVC reflects:

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Question 6

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If a firm decides to produce no output in the short run, its costs will be:

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Question 7

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DASH Airlines is considering the addition of a flight from Red Cloud to David City. The total cost of the flight would be $1,100, of which $800 are fixed costs already incurred. Expected revenues from the flight are $600. DASH should:

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Question 8

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A purely competitive firm should produce in the short run if its total revenue is sufficient to cover its:

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Question 9

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In answering the next question(s), assume a graph in which dollars are measured on the vertical axis and output on the horizontal axis.

Refer to the above information. For a purely competitive firm:

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Question 10

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In answering the next question(s), assume a graph in which dollars are measured on the vertical axis and output on the horizontal axis.

Refer to the above information. For a purely competitive firm, total revenue:

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Question 11

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Marginal revenue for a purely competitive firm:

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Question 12

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A purely competitive firm’s short-run supply curve is:

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Question 13

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In answering the next question(s), assume a graph in which dollars are measured on the vertical axis and output on the horizontal axis.

Refer to the above information. For a purely competitive firm, marginal revenue:

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Question 14

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A firm reaches a break-even point (normal profit position) where:

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Question 15

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If a profit-seeking competitive firm is producing its profit-maximizing output and its total fixed costs fall by 25 percent, the firm should:

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Question 16

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Refer to the above diagram for a purely competitive producer. The firm’s short-run supply curve is:

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Question 17

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Refer to the above diagram. For any level of output, total fixed cost:

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Question 18

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If a profit-seeking competitive firm is producing its profit-maximizing output and its total fixed costs fall by 25 percent, the firm should:

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Question 19

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The demand schedule or curve confronted by the individual purely competitive firm is:

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Question 20

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A firm finds that at its MR = MC output, its TC = $1,000, TVC = $800, TFC = $200, and total revenue is $900. This firm should:

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Question 21

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Refer to the above diagram. To maximize profit or minimize losses this firm will produce:

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Question 22

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Which of the following is characteristic of a purely competitive seller’s demand curve?

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Question 23

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Firms seek to maximize:

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Question 24

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Assume a purely competitive increasing-cost industry is initially in long-run equilibrium and that an increase in consumer demand occurs. After all economic adjustments have been completed product price will be:

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Question 25

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A firm is producing an output such that the benefit from one more unit is more than the cost of producing that additional unit. This means the firm is:

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Question 26

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Resources are efficiently allocated when production occurs where:

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Question 27

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Suppose an increase in product demand occurs in a decreasing-cost industry. As a result:

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Question 28

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Refer to the above diagrams, which pertain to a purely competitive firm producing output q and the industry in which it operates. Which of the following is correct?

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Question 29

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An increasing-cost industry is associated with:

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Question 30

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If a purely competitive firm is producing at the MR = MC output level and earning an economic profit, then:

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Question 31

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When a purely competitive firm is in long-run equilibrium:

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Question 32

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Long-run competitive equilibrium:

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Question 33

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A constant-cost industry is one in which:

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Question 34

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Which of the following is true concerning purely competitive industries?

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Question 35

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A constant-cost industry is one in which:

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Question 36

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Refer to the above diagrams, which pertain to a purely competitive firm producing output q and the industry in which it operates. In the long run we should expect:

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Question 37

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A purely competitive firm is precluded from making economic profit in the long run because:

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Question 38

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Suppose losses cause industry X to contract and, as a result, the prices of relevant inputs decline. Industry X is:

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Question 39

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Assume a purely competitive, increasing-cost industry is in long-run equilibrium. If a decline in demand occurs, firms will:

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Question 40

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When a purely competitive firm is in long-run equilibrium:

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Question 41

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Assume a purely competitive increasing-cost industry is initially in long-run equilibrium and that an increase in consumer demand occurs. After all economic adjustments have been completed product price will be:

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Question 42

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Answer the next question(s) on the basis of the following information:

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Refer to the above information. Total cost is:

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Question 43

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Other things equal, if the fixed costs of a firm were to increase by $100,000 per year, which of the following would happen?

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Question 44

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 Picture

The above diagram suggests that:

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Question 45

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Fixed cost is:

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Question 46

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 Picture

Refer to the above diagram. At output level Q average fixed cost:

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Question 47

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The above diagram shows the short-run average total cost curves for five different plant sizes of a firm. In the long run the firm should produce output 0x with a plant of size:

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Question 48

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Answer the next question(s) on the basis of the following output data for a firm. Assume that the amounts of all non-labor resources are fixed.

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Refer to the above data. Diminishing marginal returns become evident with the addition of the:

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Question 49

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Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and average variable costs of $150. The firm’s total fixed costs are:

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Question 50

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Total fixed cost (TFC):

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