Economics 308 - Managerial Economics » Summer 2023 » Quiz 1 Chs.1-2

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Question #1
As more firms enter an industry:
A.   economic profits decrease.
B.   accounting profits increase.
C.   prices rise.
D.   None of the statements associated with this question are correct.
Question #2
To maximize profits, a firm should continue to increase production of a good until:
A.   profits are zero.
B.   total revenue equals total cost.
C.   marginal revenue equals marginal cost.
D.   average cost equals average revenue.
Question #3
Which of the following pairs of goods are probably complements?
A.   Frozen yogurt and ice cream.
B.   Televisions and roller skates.
C.   Hamburgers and ketchup.
D.   Steak and chicken.
Question #4
In a competitive market, the market demand is Qd = 60 − 6P and the market supply is Qs = 4P. A price ceiling of $3 will result in a
A.   surplus of 12 units.
B.   surplus of 30 units.
C.   shortage of 15 units.
D.   shortage of 30 units.
Question #5
The law of supply states that, holding all else constant, as the price of a good falls:
A.   quantity demanded rises.
B.   quantity supplied falls.
C.   quantity supplied rises.
D.   quantity demanded falls.
Question #6
Economic profits are:
A.   marginal revenue minus marginal cost.
B.   total revenue minus total opportunity cost.
C.   total revenue minus total cost.
D.   total profits of the economy as a whole.
Question #7
For a steel factory, a decrease in the cost of electricity to the plant will cause the supply curve to:
A.   become parallel to the price axis.
B.   become flatter.
C.   shift to the left.
D.   shift to the right.
Question #8
Suppose the demand for good X is given by Qdx = 10 + axPx + ayPy + aMM. From the law of demand, we know that ax will be
A.   less than zero.
B.   greater than zero.
C.   zero or less than or greater than zero.
D.   zero.
Question #9
The opportunity cost of receiving $10 in the future as opposed to getting that $10 today is
A.   the taxes paid on any earnings.
B.   the value of $10 relative to the total income of that person.
C.   the value of $10 relative to the total income of all persons.
D.   the foregone interest that could be earned if you had the money today.
Question #10
Which of the following is an implicit cost to a firm that produces a good or service?
A.   Costs of renting or buying land for a production site.
B.   Labor costs.
C.   Foregone interest of using money that could have been kept in bank.
D.   Costs of operating production machinery.

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