03 Jun Question 1. The Omnibus Corporation finds that its daily costs are $50 when it produces no output. Its total variable costs (TVC) change with ou
Question
1.
The Omnibus Corporation finds that its daily costs are $50 when it produces no output.
Its total variable costs (TVC) change with output as shown in the accompanying table. Use this
information to answer the following question(s).
Output
1
2
3
4
5
TVC
$36
$57
$73
$94
$120
Refer to the above information. The marginal cost of the fourth unit of output is:
A) $73.
B) $94.
C) $21.
D) $23.50.
E) $24.50.
2. Suppose that a business incurred implicit costs of $500,000 and explicit costs of $6 million in a
specific year. If the firm sold 100,000 units of its output at $60 per unit, its accounting:
A) profits were $100,000 and its economic profits were zero.
B) losses were $500,000 and its economic losses were zero.
C) profits were $500,000 and its economic profits were $1 million.
D) profits were zero and its economic losses were $500,000.
3. Assume a drought in the Great Plains reduces the supply of wheat. Noting that wheat is a
basic ingredient in the production of bread and that potatoes are a consumer substitute for
bread, we would expect the price of wheat to:
A) rise, the supply of bread to increase, and the demand for potatoes to increase.
B) rise, the supply of bread to decrease, and the demand for potatoes to increase.
C) rise, the supply of bread to decrease, and the demand for potatoes to decrease.
D) fall, the supply of bread to increase, and the demand for potatoes to increase.
4. Differences in production efficiencies among nations in producing a particular good result
from:
A) different endowments of fertile soil.
B) different amounts of skilled labor.
C) different levels of technological knowledge.
D) all of the above.
5. If price is above the equilibrium level in a competitive market, competition among sellers to
reduce the resulting:
A) surplus will increase quantity demanded and decrease quantity supplied.
B) shortage will decrease quantity demanded and increase quantity supplied.
C) surplus will decrease quantity demanded and increase quantity supplied.
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