Question Question 1 3.5 out of 3.5 points What is a sunk cost?

05 Jun Question Question 1 3.5 out of 3.5 points What is a sunk cost?

Question
Question 1

3.5 out of 3.5 points

What is a sunk cost?

A.

The average cost of operating a plant

B.

A cost that always varies with the output of a factory

C.

The “lower envelope” of short-run average cost functions

D.

A cost that can be avoided if certain choices are made

Question 2

0 out of 3.5 points

Suppose a factory is producing 80 units and the price of each unit is $10. If raising the price to $15 per unit results in sales of 50 units, what is the price elasticity of demand?

Answers:

A.

13

B 0.75

C.

1.3

D.

0.6

E.

6

Question 3

3.5 out of 3.5 points

Which one of the following best describes economies of scale?

Answers:

A.

As output increases, average cost rises

B.

As output decreases, average cost rises

C.

As output increase, average cost remains the same

D

As output increases, average cost declines

E.

As output decreases, average cost declines

Question 4

3.5 out of 3.5 points

Which of the following cost line items would be a fixed cost?

Answers:

A.

Commissions to Salespeople

B.

Rent

C.

Packaging

D.

Raw Materials

E.

Shipping/Delivery Charges

Question 5

3.5 out of 3.5 points

Which of the following statements is true regarding the relationship between average and marginal cost functions?

Answers:

A.

When average cost neither increases or decreases (because it is constant or at a minimum point), marginal cost is equal to average cost

B.

The average cost function is always smaller than the marginal cost function

C.

The average cost function is always greater than the marginal cost function

D.

When average cost is a decreasing function of output, marginal cost is greater than average cost.

E.

When average cost is an increasing function of output, marginal cost is less than average cost

Question 6

3.5 out of 3.5 points

Matchmakers between manufacturers and sellers are called

Answers:

A.

Agents

B.

Factors

C.

Brokers

D.

Merchants

E.

None of the Above

Question 7

3.5 out of 3.5 points

What is Nash equilibrium?

Answers:

A.

A state at which the MR=MC for a firm

B.

A state where each player is doing the best it can, given the strategies of all other players

C.

A state where the sum of all payoffs is maximized

D.

A state where each player always must play a dominant strategy

E.

A state where the players always have achieved their best possible result

Question 8

0 out of 3.5 points

At what point can a firm achieve a profit maximizing quantity?

Answers:

A.

MR>MC

B.

MR

C.

MR=MC

D.

MR=D

E.

MC=D

Question 9

3.5 out of 3.5 points

Which of the following best describes marginal cost?

Answers:

A.

The change in cost of producing one more unit of output.

B.

The sum of all costs associate with the production of a product

C.

A cost invariant to the firm’s output

D.

The per-unit-of-output cost for a product

E.

The cost of fixed items such as general and administrative expenses

Question 10

0 out of 3.5 points

What is the Nash Equilibrium Strategy (dominant strategy) for Alpha in the following matrix?

Beta:

Enter Market

Do Not Enter Market

Alpha: Enter Market

$10M, $10M

$25M, $8M

Do Not Enter Market

$8M, $25M

$20M, $20M

Answers:

A.

Enter Market with pay off $10M

B.

Enter Market with pay off $25M

C.

Do Not Enter Market with pay off $8M

D.

Do Not Enter Market with pay off $20M

E.

There is no Nash Equilibrium for Alpha