Question Test Test 1 – Part I • Question 1

04 Jun Question Test Test 1 – Part I • Question 1

Question
Test Test 1 – Part I

• Question 1

2 out of 2 points

Economists typically assume that the owners of firms wish to

Answers: produce efficiently.

maximize sales revenues.

maximize profits.

All of the above.

• Question 2

2 out of 2 points

What do economists call the situation where a hired manager does not have the same interests as the owners of the business?

Answers: conquest and control

a financial problem

a principal-agent problem

a financial intermediary problem

• Question 3

0 out of 2 points

In contrast to the standard practice in accounting, in economic, costs are measured on a(n) ________ basis.

Answers: explicit cost

opportunity cost

historical cost

conservative

• Question 4

0 out of 2 points

If a manufacturing firm posts an accounting profit of $10 million, then the firm is making a positive economic profit

Answers: only if the implicit cost is more than $10.

only if the firm’s implicit cost is less than $10 million.

only if the firm’s opportunity benefit is more than $10 million.

only if the firm’s management receives stock compensation.

• Question 5

2 out of 2 points

After graduating from college you worked for one year as an advertising executive, earning $30,000 annually. Then you inherited a piece of commercial real estate bringing in $10,000 in rent annually. You decided to leave your job and operate a video rental store in the office space you inherited.

At the end of the first year, your books showed total revenues of $60,000 and total costs of $30,000 for video purchases, utilities, taxes, and supplies. What is the total cost of operating the video store?

Answers: $60,000

$42,000

$30,000

$70,00

• Question 6

0 out of 2 points

The main determinants of a market structure are

Answers: the ease of entry and exit.

the ability of firms to differentiate their goods and services.

the number of firms in the market.

All of the above.

• Question 7

2 out of 2 points

A competitive market

Answers: must have a physical location.

includes markets for goods and services but not for inputs.

has so many buyers and sellers that no one can influence the price.

has many sellers that sell similar but not necessarily identical products.

• Question 8

2 out of 2 points

Which of the following conditions ensures that economic profits cannot persist in a perfectly competitive market over the long run?

Answers: Large number of firms in the industry.

Outputs of the firms are perfect substitutes for one another.

Complete information is available to all market participants.

Ease of entry into the market.

• Question 9

2 out of 2 points

In a demand analysis, “quantity demanded” refers to

Answers: the amount of a good people desire

the amount of a good people are able and willing to buy during a specific time period and at a given price

the amount of a good people are able and willing to buy at all possible prices

the minimum amount of a good that people are willing to buy during a specific time period and at a given price

• Question 10

2 out of 2 points

The price of automobiles falls. How does the fall in the price of automobiles affect the demand for automobiles?

Answers: The demand for automobiles increases.

The demand for automobiles decreases.

There is no change to the demand for automobiles, but the quantity of automobiles demanded increases.

There is no change to the quantity demanded of automobiles, but the demand for automobiles increases.

• Question 11

2 out of 2 points

The price of good A goes down. As a result the demand curve for good B shifts to the right. From this we can infer that:

Answers: good A is used to produce good B.

good B is used to produce good A.

goods A and B are substitutes.

goods A and B are complements.

• Question 12

2 out of 2 points

The price of a gallon of milk rises. How does the increase in the price of milk affect the supply of milk?

Answers: The supply of milk decreases.

The supply of milk increases.

There is no change to the supply of milk, but the quantity of milk supplied increases.

There is no change to the supply of milk, but the quantity of milk supplied decreases.

• Question 13

2 out of 2 points

The owner of a computer store points out that, as the price of laptops has fallen, sales have increased tremendously. The store owner cites this example as proof that the law of supply doesn’t hold. Which of the following explanations best solves the apparent paradox cited by the businessman?

Answers:

supply was shifting outward during the period in question.

supply was shifting inward during the period in question.

demand was shifting inward during the period in question.

demand was shifting outward during the period in question.

• Question 14

0 out of 2 points

All the following events, except one of them, increase the supply of wheat. The exception is:

Answers: an advance in the technology used to grow wheat.

an increase in the number of farmers producing wheat.

a fall in the cost of the fertilizers used in wheat farming.

An increase in the price of wheat.

• Question 15

2 out of 2 points

Which of the following statements is true about market equilibrium

i. Market equilibrium can never occur because there are always people who want a good but cannot afford it.

ii. Market equilibrium occurs at the intersection of the supply and demand curves.

iii. Market equilibrium is the point where the price equals the quantity.

Answers: i only

ii only

iii only

ii and iii

• Question 16

2 out of 2 points

Suppose the equilibrium price of an 8 oz bottle of Pepsi is $1.50. If the actual price is above the equilibrium price, a

Answers: shortage exists and the price falls to restore equilibrium.

shortage exists and the price rises to restore equilibrium.

surplus exists and the price falls to restore equilibrium.

surplus exists and the price rises to restore equilibrium.

• Question 17

0 out of 2 points

Suppose both that the equilibrium price and quantity of LED TVs increased. Which of the following could be a cause of this change?

Answers:

The demand for LED TVs increased, and the supply did not change.

Both the supply and the demand for LED TVs, and the supply increased by more than the demand.

Both the supply and demand for LED TVs decreased.

The supply of LED TVs increased, and the demand for LED TVs did not change.

• Question 18

0 out of 2 points

Hot dogs and hot dog buns are complementary goods. Suppose that the price for flour, which is used to produce hot dog buns, increases. The equilibrium price of hot dogs ________, and the equilibrium quantity of hot dogs ________.

Answers: rises; decreases

rises; increases

falls; decreases

falls; increases

• Question 19

2 out of 2 points