01 Jun Question Eco550 final exam part 1 Question 1 A ____ total cost function implies that marginal costs ____ as output is increased.
Question
Eco550 final exam part 1
Question 1
A ____ total cost function implies that marginal costs ____ as output is increased.
Answer
| linear; increase linearly | ||
| quadratic; are constant | ||
| cubic; increase linearly | ||
| linear; are constant |
Question 2
Which of the following is not an assumption of the linear breakeven model:
Answer
| constant selling price per unit | ||
| decreasing variable cost per unit | ||
| fixed costs are independent of the output level | ||
| a single product (or a constant mix of products) is being produced and sold |
Question 3
Break-even analysis usually assumes all of the following except:
Answer
| in the short run, there is no distinction between variable and fixed costs. | ||
| revenue and cost curves are straight-lines throughout the analysis. | ||
| there appears to be perfect competition since the price is considered to remain the same regardless of quantity. | ||
| the straight-line cost curve implies that marginal cost is constant. |
Question 4
George Webb Restaurant collects on the average $5 per customer at its breakfast & lunch diner. Its variable cost per customer averages $3, and its annual fixed cost is $40,000. If George Webb wants to make a profit of $20,000 per year at the diner, it will have to serve__________ customers per year.
Answer
| 10,000 customers | ||
| 20,000 customers | ||
| 30,000 customers | ||
| 40,000 customers | ||
| 50,000 customers |
Question 5
The degree of operating leverage is equal to the ____ change in ____ divided by the ____ change in ____.
Answer
| percentage; sales; percentage; EBIT | ||
| unit; sales; unit; EBIT | ||
| percentage; EBIT; percentage; sa |
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