8.) Considering a firm's decision-making, the long run refers to a period in which A) its taxes are paid. B) the new fiscal year begins. C) the amount of labor used is variable. DJ all factors of production are variable. 9.) Maggie's Mushroom Farm produces 1000 pounds of mushrooms per day. At its current use of inputs, the MP (marginal product) of capital is 10 pounds, and the MP of labor is 20 pounds. An hour of capital costs $15, and an hour of labor costs $20. We can conclude that A) the firm can produce its output more cheaply by using more labor and less capital. B) the firm can produce its output more cheaply by using more capital and less labor. C) the firm can produce its output more cheaply by using less of both inputs. D) the firm is producing its output in the cheapest possible way. 10.) With 10 units of capital and 10 units of labor, Stitches' Fabrics produced 300 yards of fabric per day. After both inputs were raised to 15 units of each, the firm produced 500 yards per day. This factory experienced A) constant returns to scale. B) diseconomies of scale. C) economies of scale. D) constant costs. 11.) If total revenue is increasing as more units are sold, then marginal revenue must be A) increasing. B) constant . of bez mord eth fromodg ordi to song off fe C) positive. D) negative. 12.) From the perspective of a firm in perfect competition, marginal revenue is always 2818 (C A) equal to average cost. B) increasing plant at oded To Joubond issueisMail sepaqua la C) decreasing. D) constant. Joubord legist est get 13.) Because there are no entry barriers in Perfect Competition, in the long run A) a firm's accounting profits will turn negative. B) a firm's economic profits will tend toward zero. C) a firm's accounting profits will tend toward zero. D) a firm's economic profits will tend to equal its accounting profits. 14.) Suppose a typical perfectly competitive firm is in the following situation in the short run: price = $10; Q = 100 units; ATC = $11; AVC =$9. If this is the best a firm can do, then what will happen in the long run? A) The industry will shrink because firms are suffering losses. B) The industry will expand because of economic profits. gniew Indigso Iclonenit out bluow C) The size of the industry will remain the same. D) We can't tell. 15.) This table summarizes the demand faced by a single-price monopolist: Price A A L Quantity When this monopolist reduces its price from $8 to $7, what is its marginal revenue? A) -$1 B) $2 C) $7 D) $8Economics 206, Oertel, Winter 2020 Please print your name here: Western Washington University and record your name and Western ID on the Scantron Sheet Midterm 2, 2/28/2020 Test Form A Part 1: Multiple Choice Questions (19 points): Each of the following questions has only one right answer. Please use a pencil to record your choice in the Scantron sheet by filling in the relevant circle. There is no advantage to leaving anything blank. 1.) Lou consumes a lot of tea, which is a normal good for this consumer. When the price of tea increases, A) the income effect causes her to consume more tea. B) the substitution effect causes her to consume more tea. C) her income and substitution effects work in opposite directions. D) both income and substitution effects cause her to consume less tea. 2.) Assume that sodas cost $1.50 each, and sandwiches cost $4.50 each. Bradford has $30 to spend. Which of the following combinations will maximize Bradford's utility? Answer Sodas MU of Sodas Sandwiches MU of Sandwiches in t m N 3.) Juan is willing to pay $100 for a new phone and Sarah is willing to pay $85. What is the gain in total consumer surplus if the price of the phone falls from $90 to $70? A) $15 B) $35 C) $160 D) $185 4.) Suppose the Marginal Product of Labor is below (less than) its Average Product. Then using more labor will A) reduce its Total Product B) raise its Average Product. C) raise its Marginal Product. D) reduce its Average Product. 5.) The firm "Finest Cabinetry" produces 100 tables per week, at a total cost of $10,000 and total fixed cost of $6,000. We can conclude that average variable cost is A) $4,000. B) $100. C) $60. DJ $40. landa flow yDaubers T (A 6.) A large firm would raise financial capital using equity by doing which of the following: A) selling new shares. B) selling bonds to the public. C) taking out a loan from a bank. D) getting its directors to lend it money. 7.) What is meant by a firm's capacity? A) The output level where revenue is maximized. B) The output level where profits are maximized. C) The output level where ATC are minimized. D) The highest output level it can produce. This study source was downloaded by 100000810021609 from CourseHero.com on 05-15-2023 00:02:26 GMT -05:00