05 Jun Question FINAL EXAM SECTION 1. : Microeconomics. 2012, SPRING.
Question
FINAL EXAM SECTION 1. : Microeconomics. 2012, SPRING.
Dr. CHARLES A. BRIGGS.
Alex quit his job at State University where he earned $45,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 for each unit. Of the $75 per unit, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building.
1.
Refer to the above information. The explicit costs of the firm in the first year were:
A. $655,000.
B. $150,000.
C. $825,000.
D. $605,000.
2.
Refer to the above information. The total economic costs (explicit and implicit, including a normal profit) in the first year were:
A.$665,000.
B. $825,000.
C.$60,000.
D.$150,000.
3
Refer to the above table. The average total cost of producing 3 units of output is:
A.$9.33.
B. $38.
C.$10.
D.$12.67.
4
Refer to the above table. The average fixed cost for producing 3 units of output is:
A.$3.33.
B.$10.
C.$38.
D.$12.67.
5
Refer to the above table. The marginal cost of producing the sixth unit of output is:
A.$98.
B $25.
C.$10.
D.$16.33.
6.
The phrase “don’t cry over spilt milk” could be rephrased in economic terms by saying:
A.
“real resources have opportunity costs.”
B.
“the law of diminishing returns applies to everything.”
C.
“sunk costs are irrelevant to a decision.”
D.
“there are economies and diseconomies of scale.”
7.
Marginal cost can be defined as the:
A.
amount which one more unit of output adds to total cost.
B.
change in fixed cost resulting from one more unit of production.
C.
difference between price and average total cost at the profit-maximizing level of output.
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