Economics 5050

1680 Words Mar 22nd, 2012 7 Pages
• Question 1
0 out of 1 points In making a decision about whether to increase its advertising budget the firm management should not consider
Answer
Selected Answer: the added revenue from increased sales
Correct Answer: interest payments on the firm's loan.
Response Feedback: Is this fixed cost that the firm has to pay regardless of advertising? • Question 2
0 out of 1 points If marginal cost is equal to average total cost, then
Answer
Selected Answer: a. marginal cost is minimized.
Correct Answer: b. average total cost is minimized. • Question 3
0 out of 1 points A restaurant currently has two cooks and ten waiters. Cooks earn $10 an hour and waiters earn $5 an hour. The last cook
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could serve more patients with the same payroll by hiring more doctors and fewer nurses.
Correct Answer: d. could serve more patients with the same payroll by hiring more nurses and fewer doctors.
Response Feedback: You have to consider the marginal product per dollar spent, i.e., the number of additional patients served divided by salary. At the optimal, MP/P must be equal for doctors and nurses. Are they? • Question 10
0 out of 1 points We observe that the equilibrium price of coffee falls and the equilibrium quantity falls. Which of the following best fits the observed data?
Answer
Selected Answer: a. an increase in demand with supply constant.
Correct Answer: d. a decrease in demand with supply constant. • Question 11
1 out of 1 points When Sonoma Vineyards reduces the price of its Cabernet Sauvignon from $15 a bottle to $12 a bottle, the result is an increase in
Answer
Selected Answer: c. the quantity of this wine demanded.
Correct Answer: c. the quantity of this wine demanded. • Question 12
0 out of 1 points Economic profit is the best measure of a firm’s performance because
Answer
Selected Answer: b. economic profit fully accounts for all sources of revenue.
Correct Answer: d. the opportunity cost of using ALL resources is subtracted from total revenue. • Question 13
0 out of 1 points You receive a phone call from a telemarketing firm and are

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