5

In general, marginal product may increase first, as the amount of the variable input increases. But eventually, marginal product will decrease.

Select one:

True

False

12

In a long-run equilibrium in a perfectly competitive market, which of the following is true? (Suppose all firms have identical cost curves)

a.

The firm won't benefit from changing the level of the fixed inputs

b.

Economic profit can be negative

c.

Accounting profit may be negative

d.

P=AVC

Clear my choice

14

In the early 2000s, the number of business travellers increased as a result of globalization. We observe that as the price for a certain flight increases by 4%, the number of passengers booking this flight decreases by 1%. Therefore, according to this description:

a.

The price elasticity of demand is 0.25.

b.

There is a movement along the original demand curve.

c.

The demand of this flight is inelastic.

d.

We don't know the price elasticity of demand without further information.

24. Assume that the market is perfectly competitive. According to the short-run cost curves above:

1) When do we have diminishing returns?

2) What is the shut-down price?

3) When do we have the maximum average product of the variable input in the short run?

4)What is the break-even price?

5) What is the profit when P=9? (Calculate it.)

25

Which of the following can be an implicit cost if I start a chocolate business?

a.

The extra phone bills paid when I communicate with suppliers and customers.

b.

Returns I could otherwise earn if I invested the money in a mutual fund instead of investing it into the current business

c.

The wages I pay to my employees

d.

Interest payment made to the bank if I borrow money to buy the factory.

28

Which of the following is true when the outcome is efficient, but not true when the outcome is inefficient?

a.

P=MC

b.

P=ATC

c.

MR=MC

d.

MR=P

30

The more expensive a good is, the higher is its marginal value at the last unit consumed.

Select one:

True

False