1.An increase in employer-paid pension costs will decrease the:

(a)supply of workers.

(b)quantity supplied of workers.

(c)quantity demanded of workers.

(d)demand for workers.

2.The production function Q = -64X^0.5Y^0.4 exhibits:

(a)constant returns to scale.

(b)increasing returns to scale.

(c)diminishing returns to scale.

(d)increasing and then diminishing returns to scale.

3.If P_X = 60,000, MP_X = 300 and MR_Q = 250, the marginal revenue product of X equals:

(a)75,000.

(b)300.

(c)250.

(d)60,000.

4.Minimum efficient scale will decrease if:

(a)fixed costs increase.

(b)transportation costs increase in relation to production costs.

(c)transportation costs decrease in relation to production costs.

(d)variable costs decrease.

5.If the slope of a long-run total cost function increases as output increases, the firm's underlying production function exhibits:

(a)constant returns to scale.

(b)decreasing returns to scale.

(c)decreasing returns to a factor input.

(d)increasing returns to scale.

6.Assume the following for a firm:

Demand function:P = 53 - Q

Total Revenue function: TR = 53Q - Q²

Marginal Revenue: MR = 53 - 2Q

Total cost function: TC = 1,000 + 5Q + Q²

Marginal cost function: MC = 5 + 2Q

Average cost function: AC = 1,000/Q + 5 + Q

The profit maximising level of output will be:

(a)11

(b)12

(c)13

(d)14

7.Using the profit maximising level from the previous question above, the profit maximising Total Revenue will be:

(a)492

(b)352

(c)406

(d)390

8.When demand is perfectly elastic, regulatory costs are never borne by:

(a)consumers.

(b)management.

(c)stockholders.

(d)government.

9.The desirability of maintaining a reputation for selling high-quality goods and services is minimal in the case of:

(a)a finitely repeated game with known duration.

(b)a finitely repeated game of unknown duration.

(c)an infinitely repeated game.

(d)none of these.

10.In the risk-adjusted discount rate approach, increasing risk aversion is reflected in a cost of capital that exceeds the:

(a)risk-free rate.

(b)risk free rate and falls with increasing risk.

(c)risk free rate and falls with decreasing risk.

(d)none of these.