Download Review ch 12-14

ECON 2106 Chapter 12-14 Review
SI date: Tuesday 11/02
Next exam: 11/16
1. The city bus system charges lower fares to senior citizens than to other passengers.
Assuming that this pricing strategy increases the profits of the bus system, we can
conclude that senior citizens must have a ________ for bus service than other
passengers.
A) greater demand
B) lower demand
C) more elastic demand
D) less elastic demand
2. Kaile Cakes is currently producing 10 cakes per day. The marginal cost of the tenth cake
is $24, and average total cost of 10 cakes is $6. The average total cost of 9 cakes is:
A) $4.
B) $5.
C) $6.
D) $8.
3. Many furniture stores run “Going out of Business” sales but never go out of business. In
order for the shut-down decision to be the appropriate one, the price of furniture must be
________ than the ________ average variable cost.
A) higher; maximum
B) lower; minimum
C) higher; minimum
D) lower; maximum
Page 1
Use the following to answer question 4:
Figure and Table: Variable, Fixed, and Total Costs
4. (Figure and Table: Variable, Fixed, and Total Costs) In the figure, the marginal cost of
increasing production from 19 to 36 bushels of wheat is:
A) $23.53.
B) $11.76.
C) $22.22.
D) $200.
Page 2
Use the following to answer question 5:
5. (Table: Demand for Lenny's Coffee) Lenny's Café is the only source of coffee for
hundreds of miles in any direction. The demand schedule for Lenny's coffee is given by
the table. If Lenny's marginal cost of selling coffee is a constant $2, his
profit-maximizing level of output is ________ cups at a price of ________ per cup.
A) four; $6
B) eight; $3
C) five; $5
D) three; $7
6. At 76 units of labor, a firm finds that average product of labor equals 39.6 and marginal
product of labor equals 42.9. We can conclude that the average product curve at 76 units
of labor is:
A) upward-sloping.
B) downward-sloping.
C) vertical.
D) horizontal.
7. The slope of a long-run average total cost curve exhibiting diseconomies of scale is:
A) zero.
B) infinite.
C) positive.
D) negative.
Page 3
Use the following to answer question 8:
Figure: Revenues, Costs, and Profits III
8. (Figure: Revenues, Costs, and Profits III) In the figure, if the market price is $8, the
profit-maximizing quantity of output is:
A) 0.
B) 1.
C) 2.
D) 3.
9. One government policy for dealing with a natural monopoly is to:
A) impose a price floor to eliminate the deadweight loss.
B) impose a price ceiling to eliminate any economic profit.
C) break it up into smaller firms.
D) impose fines on the monopolist.
Figure: Revenues, Costs, and Profits
10. (Figure: Revenues, Costs, and Profits) At the profit-maximizing quantity of output in the
figure, total revenue is $________, total cost is $________, and profit is $________.
A) 90; 14; 76
B) 90; 70; 20
C) 30; 42; –12
D) 48; 56; –8
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Answer Key
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
C
A
B
B
A
A
C
A
B
B
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